Energy Economy

Crude Oil Price Narrows Loss as Inventory Slides

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning showing that U.S. commercial crude inventories decreased by 1.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 432.4 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 nearly 4.9 million barrels in the week ending May 11. Gasoline inventories declined by about 3.4 million barrels and distillate stockpiles decreased by about 770,000 barrels. For the same period, analysts expected crude inventories to decrease by about 760,000 barrels and gasoline inventories to drop by 1.4 million barrels. Diesel inventories are seen down about 2.1 million barrels.

Total gasoline inventories decreased by 3.8 million barrels last week, according to the EIA, and remain in the upper half of the five-year average range. U.S. refineries produced about 10.5 million barrels of gasoline a day last week, up by about 600,000 barrels compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged about 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 June delivery traded down about 0.8% at around $70.73 a barrel and rose to around $71.08 (down about 0.3%) shortly after the report’s release. WTI settled at $71.31 on Tuesday and opened at $71.00 Wednesday morning. The 52-week range on June futures is $44.54 to $71.89.

In last week’s report on the U.S. trade balance, the Census Bureau reported that the U.S. trade deficit with the rest of the world grew by about $23 billion compared with the year-ago period. The non-petroleum portion of the deficit rose by $26 billion and the petroleum-based portion improved by nearly $4 billion.

U.S. exports of crude and refined products have jumped and U.S. imports of crude oil to an average of around 4 million barrels a day, nearly two-thirds less than the 12.5 million barrels a day the United States imported at the peak in 2005. The United States is now a net exporter of refined products and an important exporter of crude oil.

Week over week, U.S. crude oil exports rose by 689,000 barrels a day, and U.S. production rose by 20,000 barrels a day to 10.72 million barrels. Exports averaged 2.57 million barrels a day last week and have a cumulative daily average for the year of 1.69 million barrels a day, a 119% increase over the year-ago export total.

Distillate inventories decreased by 100,000 barrels last week and remain in the lower half 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 3% compared with the same period last year. Distillate production averaged over 5 million barrels a day last week, roughly flat compared to the prior week’s production.

For the past week, crude imports averaged 7.6 million barrels a day, up by 278,000 barrels a day compared with the previous week. Refineries were running at 91.1% of capacity, with daily input averaging over 16.6 million barrels a day, about 149,000 more than the previous week’s average. Exports of refined products fell by 176,000 barrels a day last week to 4.64 million barrels a day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.891, up 6.5 cents from $2.826 a week ago and up 17.7 cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.336 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 $81.57 in a 52-week range of $72.16 to $89.30. Over the past 12 months, Exxon stock has traded down about 1.2%.

Chevron Corp. (NYSE: CVX) traded down about 0.4%, at $129.22 in a 52-week range of $102.55 to $133.88. As of last night’s close, Chevron shares are trading up about 20.4% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded down less than 0.1%, at $14.40 in a 52-week range of $8.65 to $14.44.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 1.1%, at $28.75 in a 52-week range of $21.70 to $29.53.