Crude Oil Price Drops on Lower Inventories, Booming Crude Exports

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories decreased by 2.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 454.9 million barrels. The commercial crude inventory remains in 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 million barrels in the week ending October 27. API also reported gasoline supplies tumbled by 7.7 million barrels and distillate inventories fell by 3.1 million barrels. For the same period, analysts had consensus estimates for a decrease of 2.75 million barrels in crude inventories, a drop of 2.1 million barrels in gasoline and 2.45 million barrels less in distillate stockpiles.

Total gasoline inventories fell by 4 million barrels last week, according to the EIA, and have dropped into the middle of the five-year average range. U.S. refineries produced 10.2 million barrels of gasoline a day last week, up about 300,000 barrels a day compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged over 9.3 million barrels a day for the past four weeks, roughly flat compared with the prior week.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for December delivery traded up about 1.2% at around $55.02 a barrel, and it traded at $54.74 shortly after the report, before sliding further to near $54.50. WTI settled at $53.48 on Tuesday and opened at $54.65 Wednesday morning. The 52-week range on December futures is $43.08 to $58.44.

Even the sharp drops in crude oil inventories do not offset the even sharper increase in exports. Crude oil exports totaled more than 2.1 million barrels a day last week. Refined exports fell by 194,000 barrels a day last week to 5.74 million barrels. On a cumulative daily average basis for the year to date, crude exports are up 90% and refined product exports are up nearly 18%.

Week over week, U.S. crude oil exports rose by 209,000 barrels a day last week and U.S. production rose by 46,000 barrels a day.

Distillate inventories decreased by 300,000 barrels last week and have moved down into the lower half of the average range for this time of year. Distillate product supplied averaged 3.7 million barrels a day over the past four weeks, down by 9.3% compared with the same period last year. Distillate production averaged over 5 million barrels a day last week, up about 200,000 barrels a day compared to the prior week’s production.

For the past week, crude imports averaged about 7.6 million barrels a day, down by about 552,000 barrels a day compared with the previous week. Refineries were running at 88.1% of capacity, with daily input averaging over 16 million barrels a day, about 10,000 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 $2.482, up more than 2.5 cents from $2.459 a week ago and down nearly seven cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.206 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 0.4%, at $83.65 in a 52-week range of $76.05 to $93.22. Over the past 12 months, Exxon stock has traded down about 0.4%.

Chevron Corp. (NYSE: CVX) traded up about 0.2%, at $116.11 in a 52-week range of $102.55 to $120.89. As of last night’s close, Chevron shares were up about 8.8% over the past 12 months.

The United States Oil ETF (NYSEARCA: USO) traded down about 0.4%, at $10.89 in a 52-week range of $8.65 to $12.00.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 4.6% to $24.44, in a 52-week range of $21.70 to $36.35.