Crude Oil Price Jumps on Inventory Drawdowns

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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 1.1 million barrels last week, maintaining a total U.S. commercial crude inventory of 427.6 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 fell by about a million barrels in the week ending April 13. Gasoline inventories fell by about 2.5 million barrels and distillate stockpiles decreased by 854,000 barrels. For the same period, analysts expected crude inventories to increase by 625,000 barrels and gasoline inventories to drop by 1.9 million barrels. Diesel inventories are seen down about 1.6 million barrels.

Total gasoline inventories decreased by 3.0 million barrels last week, according to the EIA, and are now situated in the upper half of the five-year average range. U.S. refineries produced 10.2 million barrels of gasoline a day last week, flat compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9.4 million barrels a day for the past four weeks, up about 0.7% compared with the same period a year ago.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for May delivery traded up about 1.9%, at around $67.76 a barrel, and it rose to around $68.29 (up about 2.7%) shortly after the report’s release. WTI settled at $66.52 on Tuesday and opened at $66.68 Wednesday morning. The 52-week range on May futures is $44.34 to $68.45, and the high was posted this morning.

In an exclusive report from Reuters this morning, sources say that Saudi Arabia is unlikely to seek to end current reduced production levels when the deal with other OPEC members and other partners, including Russia, expires in December. The Saudis are said to be looking for a benchmark Brent crude price of $80 or even $100 a barrel.

One big reason for the higher desired price is the still-developing initial public offering of Saudi Aramco. The company’s vast reserves priced at $100 a barrel would drive the IPO through the roof.

U.S. crude oil exports rose by 544,000 barrels a day last week, and U.S. production rose by 15,000 barrels a day to 10.54 million. Exports averaged 1.75 million barrels a day last week and have a cumulative daily average for the year of 1.54 million barrels a day, a 107% increase over the year-ago export total.

Distillate inventories decreased by 3.1 million barrels last week and remain in the lower half of the average range for this time of year. Distillate product supplied averaged 4.2 million barrels a day for the past four weeks, down by 2% compared with the same period last year. Distillate production averaged 5.1 million barrels a day last week, down by about 200,000 barrels a day compared to the prior week’s production.

For the past week, crude imports averaged over 7.9 million barrels a day, down by 720,000 barrels a day compared with the previous week. Refineries were running at 92.4% of capacity, with daily input averaging over 16.9 million barrels a day, about 70,000 less than the previous week’s average. Exports of refined products fell by 480,000 barrels a day last week to 4.98 million.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.731, up almost seven cents from $2.66 a week ago and up nearly 19 cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.409 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 1.3%, at $79.34 in a 52-week range of $72.16 to $89.30. Over the past 12 months, Exxon stock has traded down about 3.4%.

Chevron Corp. (NYSE: CVX) traded up about 1.5%, at $123.250 in a 52-week range of $102.55 to $133.88. As of last night’s close, Chevron shares are trading up about 14.9% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded up about 2.2%, at $13.71 in a 52-week range of $8.65 to $13.80, a high set today.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 2.8%, at $27.10 in a 52-week range of $21.70 to $30.04.

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