Crude Oil Prices Move Higher on Oil, Gasoline Inventory Declines

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories decreased by 5.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 522.5 million barrels. The commercial crude inventory has moved down into the upper half of the average range for this time of year.

Tuesday evening, the American Petroleum Institute (API) reported that crude inventories fell by 5.8 million barrels in the week ending May 5. API also reported gasoline supplies increased by 3.8 million barrels and distillate inventories decreased by 1.2 million barrels. For the same period, an S&P Global Platts survey of analysts had consensus estimates for a decrease of 1.8 million barrels in crude inventories, a decrease of 700,000 barrels in gasoline inventories and a drop of 800,000 barrels in distillate stockpiles.

Total gasoline inventories decreased by 200,000 barrels last week, according to the EIA, and are now above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged over 9.2 million barrels a day for the past four weeks, down by 2.4% compared with the same period a year ago.

Platts oil futures editor, Geoffrey Craig, said:

One factor weighing on trader positioning is U.S. crude production, which continues to climb and offset the impact of OPEC-supply cuts.

Even with crude futures trading around $46/b [per barrel], significantly below the $51/b-$55/b levels of January and February, some producers are already insulated from an ongoing downturn due to hedges placed earlier this year.

The amount of crude processed by refiners hit a record high the week that ended April 21, and refinery utilization has stayed far above typical levels for this time of year.

Analysts forecast a 0.1 percentage point drop in refinery runs for the latest reporting week to 93.2% of operable capacity. If confirmed, that would far exceed the rate from a year prior which stood at 89.1% of capacity.

Crack spreads in April encouraged refiners to run at greater capacity, which pulled crude barrels from storage but also generated a quantity of products that the market must now absorb.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 1.6% at around $46.61 a barrel, and it rose to $46.94 shortly after the report’s release. WTI crude settled at $45.88 on Tuesday. The 52-week range on June futures is $43.76 to $57.95.

Distillate inventories fell by 1.6 million barrels last week and remain in the upper half of the average range for this time of year. Distillate product supplied averaged 4.1 million barrels a day over the past four weeks, down by 0.7% compared with the same period last year. Distillate production averaged about 5 million barrels a day last week, down 100,000 barrels compared with the prior week’s production.

For the past week, crude imports averaged over 7.6 million barrels a day, down by about 644,000 barrels a day compared with the previous week. Refineries were running at 91.5% of capacity, with daily input averaging 16.8 million barrels a day, about 418,000 barrels a day less than the previous week’s average.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.337, down three cents from $2.367 a week ago and down more than five cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.199 on average in the United States.

Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.

Exxon Mobil Corp. (NYSE: XOM) traded up about 1%, at $82.32 in a 52-week range of $80.30 to $95.55. Over the past 12 months, Exxon stock has traded down about 7% and is down about 20.2% since August 2014, as of Tuesday’s close.

Chevron Corp. (NYSE: CVX) traded up about 1.4%, at $106.54 in a 52-week range of $97.53 to $119.00. As of last night’s close, Chevron shares have added about 3.2% over the past 12 months and trade down about 21.3% since August 2014.

The United States Oil ETF (NYSEMKT: USO) traded up about 2.4%, at $9.80 in a 52-week range of $9.23 to $12.45.

The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 2.1%, at $27.91 in a 52-week range of $26.10 to $36.35.