Crude Oil Price Holds On to Gain as Stockpiles Drop

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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 5.8 million barrels last week, maintaining a total U.S. commercial crude inventory of 408.4 million barrels. The commercial crude inventory is level with the five-year average for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories dropped by 5.2 million barrels in the week ending August 17. Gasoline inventories decreased by 930,000 barrels, and distillate stockpiles rose by about 1.8 million barrels. For the same period, analysts expected crude inventories to decrease by about 1.5 million barrels. Gasoline inventories were seen down by 488,000 barrels, and distillate inventories were expected to rise by about 1.5 million barrels.

Crude prices have moved higher this week as traders begin to position themselves for the end of the summer driving seasons. In the futures and options markets, hedge funds and other nonmarket participants have cut their long positions drastically without adding significantly to their short positions. It’s time to take some profits and wait to see what happens next.

Total gasoline inventories increased by 1.2 million barrels last week, according to the EIA and are now about 6% above the five-year average range. U.S. refineries produced about 10.2 million barrels of gasoline a day last week, equal to production in the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9.5 million barrels a day for the past four weeks, about 100,000 barrels less compared with the prior week.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for October delivery traded up about 2.2% at around $67.28 a barrel, and it dropped to around $67.05 (up about 1.8%) shortly after the report’s release. WTI for September delivered settled at $65.84 on Tuesday, the contract’s expiration date, and crude for October delivery opened at $66.13 Wednesday morning. The 52-week range on October futures is $49.20 to $71.63.

Week over week, U.S. crude oil exports fell by 437,000 barrels a day last week, and U.S. production rose by 100,000 barrels a day to 11 million barrels. Exports averaged 1.16 million barrels a day last week and have a cumulative daily average for the year of 1.8 million barrels a day, a 133% increase over the year-ago export total.

Distillate inventories rose by 1.8 million barrels last week and are about 7% below the five-year average range for this time of year. Distillate product supplied averaged 3.9 million barrels a day for the past four weeks, about flat compared with the prior week. Distillate production averaged 5.4 million barrels a day last week, up by 100,000 barrels compared to the prior week’s production.

For the past week, crude imports averaged 7.5 million barrels a day, down by nearly 1.5 million barrels a day compared with the previous week. Refineries were running at 98.1% of capacity, with daily input averaging 17.9 million barrels a day, about 89,000 barrels a day less than the previous week’s average. Exports of refined products rose by 96,000 barrels a day last week to 5.37 million barrels a day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.827, down by three cents from $2.857 a week ago and more than two cents lower compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.337 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 $79.83 in a 52-week range of $72.15 to $89.30. Over the past 12 months, Exxon stock has traded up about 4%.

Chevron Corp. (NYSE: CVX) traded up about 1.2%, at $119.39 in a 52-week range of $105.81 to $133.88. As of last night’s close, Chevron shares are trading up about 12.3% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded up about 2.6%, at $14.19 in a 52-week range of $9.34 to $15.25.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 1.6%, at $25.14 in a 52-week range of $21.79 to $29.87.