Crude Oil Price Curbs Drop on Surprise Inventory Build

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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, showing that U.S. commercial crude inventories decreased by 4.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 434.5 million barrels. The commercial crude inventory remains in the lower half of the average range for this time of year.

Wednesday evening the American Petroleum Institute (API) reported that crude inventories rose by a million barrels in the week ending May 25. Gasoline inventories decreased by 1.7 million barrels, and distillate stockpiles increased by about 1.5 million barrels. For the same period, analysts expected crude inventories to increase by about 2.2 million barrels.

Total gasoline inventories increased by 500,000 barrels last week, according to the EIA, and remain in the upper half of the five-year average range. U.S. refineries produced about 10.4 million barrels of gasoline a day last week, up by about 400,000 barrels compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged about 9.7 million barrels a day for the past four weeks, up about 0.8% compared with the same period a year ago.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for July delivery traded down about 1.3% at around $67.36 a barrel and rose to around $67.64 (down about 0.9%) shortly after the report’s release. WTI settled at $68.21 on Tuesday and opened at $68.22 Wednesday morning. The 52-week range on July futures is $45.18 to $72.90.

Crude oil prices have bounced around this week, largely due to reports that Saudi Arabia and Russia are likely to raise production now that OPEC and its partners have brought global crude stockpiles back into balance. Along with more drilling and higher production in the United States, the effect will be to lower prices for crude and, ultimately, at the pump.

OPEC meets again in late June, and analyst opinion is divided over whether the cartel and its partners will loosen the oil spigots. The price of Brent crude likely will play a decisive role — the nearer it is to $80 a barrel, the more likely we are to see increased supply.

Week over week, U.S. crude oil exports rose by 431,000 barrels a day last week, and U.S. production rose by 44,000 barrels a day to 10.77 million barrels. Exports averaged 2.18 million barrels a day last week and have a cumulative daily average for the year of 1.71 million barrels a day, a 118% increase over the year-ago export total.

Distillate inventories increased by 600,000 barrels last week and remain in the lower half of the average range for this time of year. Distillate product supplied averaged over 4.1 million barrels a day for the past four weeks, down by 1.5% compared with the same period last year. Distillate production averaged about 5.3 million barrels a day last week, up about 400,000 compared to the prior week’s production.

For the past week, crude imports averaged over 7.6 million barrels a day, down by 528,000 compared with the previous week. Refineries were running at 93.9% of capacity, with daily input averaging about 17.2 million barrels a day, about 527,000 more than the previous week’s average. Exports of refined products fell by 490,000 barrels a day last week to 4.64 million.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.959, down a fraction from $2.961 a week ago and up 17.8 cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.372 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 0.5%, at $81.10 in a 52-week range of $72.16 to $89.30. Over the past 12 months, Exxon stock has traded up about 0.7%.

Chevron Corp. (NYSE: CVX) traded down about 1.1%, at $123.80 in a 52-week range of $102.55 to $133.88. As of last night’s close, Chevron shares are trading up about 19.5% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded down about 1.3%, at $13.65 in a 52-week range of $8.65 to $14.74.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded down about 1.3%, at $27.28 in a 52-week range of $21.70 to $29.87.