Crude Oil Price Bounces on Addition to Commercial Inventories

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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 increased by 6.8 million barrels last week, maintaining a total U.S. commercial crude inventory of 418.4 million barrels. The commercial crude inventory remained in the middle of the average range for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by about 3.23 million barrels in the week ending January 26. Gasoline inventories rose by 2.69 million barrels, and distillate stockpiles fell by about 4.1 million barrels. For the same period, analysts polled had consensus estimates for an increase of 126,000 barrels in crude inventories, a rise of about 1.8 million barrels in gasoline and a decrease of 1.45 million barrels in distillate stockpiles.

Total gasoline inventories decreased by 2 million barrels last week, according to the EIA, and are now near the top of the five-year average range. U.S. refineries produced about 9.6 million barrels of gasoline a day last week, up by about 200,000 barrels a day compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged about 8.8 million barrels a day for the past four weeks, up about 7.1% compared with the same period a year ago.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for March delivery traded down about 0.3%, at around $64.34 a barrel, and dropped sharply to around $63.95 after the report’s release. WTI settled at $64.50 on Tuesday and opened at $64.03 Wednesday morning. The 52-week range on March futures was $43.91 to $66.66.

Crude oil added about 4.5% to its price last week, and it has given back about half of that in the first couple of days of this week. One thing traders have been worried about appears to be coming to pass. U.S. production is up, exports are up and the number of drilling rigs is up. All that adds up to more barrels and lower prices.

One prop to prices is that refinery maintenance has begun in earnest. Refinery utilization dropped to below 90% last week, and as is typical this time of year will drop a few more points as refiners make planned repairs and begin the switch to summer-grade fuel. Pump prices may not move down much, however, until later next month when we might see a temporary drop as distributors unload their (cheaper) winter-grade fuel to make way for new supplies of the summer-grade.

Week over week, U.S. crude oil exports rose by 354,000 barrels a day last week and U.S. production increased by 41,000 barrels a day to 9.92 million. Exports averaged 1.77 million barrels a day last week and have a cumulative daily average for the year of 1.4 million barrels a day, a 120% increase over the year-ago export total.

Distillate inventories decreased by 1.9 million barrels last week and moved to the middle of the average range for this time of year. Distillate product supplied averaged about 4.2 million barrels a day for the past four weeks, up by 13.3% compared with the same period last year. Distillate production averaged 4.6 million barrels a day last week, down about 200,000 compared to the prior week’s production.

For the past week, crude imports averaged about 8.4 million barrels a day, down by 380,000 compared with the previous week. Refineries were running at 88.1% of capacity, with daily input averaging 16 million barrels a day, about 470,000 less than the previous week’s average. Exports of refined products rose by 82,000 barrels a day last week to 4.88 million.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.591, up nearly four cents from $2.553 a week ago and up nearly 11 cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.276 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 down about 0.3%, at $86.56 in a 52-week range of $76.05 to $89.30. Over the past 12 months, Exxon stock has traded up about 3.2%.

Chevron Corp. (NYSE: CVX) traded down about 0.4%, at $124.75 in a 52-week range of $102.55 to $133.88. As of last night’s close, Chevron shares are trading up about 12% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded down about 0.2%, at $12.87 in a 52-week range of $8.65 to $13.30.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded down about 0.8%, at $27.49 in a 52-week range of $21.70 to $33.81.