Crude Oil Price Cuts Loss Following Inventory Report

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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 2.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 425.9 million barrels. The commercial crude inventory remains in the lower half of the average range for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by about 5.66 million barrels in the week ending March 2. Gasoline inventories fell by 4.54 million barrels and distillate stockpiles increased by 1.49 million barrels. For the same period, analysts had consensus estimates for an increase of 2.7 million barrels in crude inventories, a decrease of about 1.2 million barrels in gasoline inventories, and an increase of 1.2 million barrels in distillate stockpiles.

Total gasoline inventories decreased by 800,000 barrels last week, according to the EIA, and remain in the upper half of the five-year average range. U.S. refineries produced about 9.9 million barrels of gasoline a day last week, up by about 500,000 compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9 million barrels a day for the past four weeks, up about 3.3% compared with the same period a year ago.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for April delivery traded down about 1.2% at around $61.85 a barrel and rose to around $62.15 (down 0.7%) shortly after the report’s release. WTI settled at $62.60 on Tuesday and opened at $62.14 Wednesday morning. The 52-week range on April futures was $44.17 to $66.39.

Crude prices have been under pressure this week as forecasts for U.S. production over the next several years continue to indicate big increases. On Monday the International Energy Agency said it expected U.S. shale oil production to drive crude markets for the next five years.

On Tuesday, the EIA released the monthly update to its Short-Term Energy Outlook. U.S. crude oil production hit 10.3 million barrels a day in February and is on its way to a record-breaking annual average daily production of 10.7 million barrels a day this year.

Week over week, U.S. crude oil exports rose by 53,000 barrels a day last week and U.S. production rose by 86,000 barrels a day to 10.37 million barrels. Exports averaged 1.5 million barrels a day last week and have a cumulative daily average for the year of 1.47 million barrels a day, an 87% increase over the year-ago export total.

Distillate inventories decreased by 600,000 barrels last week and remain in the middle of the average range for this time of year. Distillate product supplied averaged over 4 million barrels a day for the past four weeks, up by 0.6% compared with the same period last year. Distillate production averaged 4.6 million barrels a day last week, up about 100,000 barrels a day compared to the prior week’s production.

For the past week, crude imports averaged 8 million barrels a day, up by 721,000 compared with the previous week. Refineries were running at 88% of capacity, with daily input averaging over 15.9 million barrels a day, about 53,000 more than the previous week’s average. Exports of refined products rose by 681,000 barrels a day last week to 4.91 million.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.526, down less than a penny from $2.53 a week ago and down nearly eight cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.305 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 1.9%, at $74.71 in a 52-week range of $73.90 to $89.30. Over the past 12 months, Exxon stock has traded down about 9.5%. The company announced an aggressive investment plan this morning.

Chevron Corp. (NYSE: CVX) traded up about 0.9%, at $114.708 in a 52-week range of $102.55 to $133.88. As of last night’s close, Chevron shares are trading up about 2.5% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded flat at $12.57, in a 52-week range of $8.65 to $13.30.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded down about 0.5%, at $24.38 in a 52-week range of $21.70 to $31.54.

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