Crude Oil Price Moves Up Following Sizable Inventory Decline

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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 2.6 million barrels last week, maintaining a total U.S. commercial crude inventory of 405.8 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 rose by just 38,000 barrels in the week ending August 24. Gasoline inventories also increased by a tiny 21,000 barrels and distillate stockpiles rose by about 982,000 barrels. For the same period, analysts expected crude inventories to decrease by about 500,000 barrels. Gasoline inventories were seen rising by 370,000 barrels, and distillate inventories were expected to rise by about 1.6 million barrels.

The past week’s biggest news, even though it didn’t have any effect on crude prices, was the announced delay for the initial public offering (IPO) of Saudi Aramco, the Saudi national oil company. The big problem is — and has been since the IPO was first announced — required disclosures of the company’s finances in order to be listed on a major exchange in New York, London or Hong Kong. The Saudis even dumped plans to list on the country’s own Tadawul exchange, primarily because it is too small and illiquid to handle a $100 billion IPO. The offering has not been canceled, according to a press statement, only delayed to a “time of [Aramco’s] own choosing when conditions are optimum.”

Total gasoline inventories decreased by 1.6 million barrels last week, according to the EIA, and are now about 5% 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 9.6 million barrels a day for the past four weeks, about 100,000 barrels more compared with the prior week’s average.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for October delivery traded up about 0.8%, at around $69.07 a barrel, and it rose further to around $69.34 (up about 1.2%) shortly after the report’s release. WTI for October delivery opened at $68.50 Wednesday morning, mostly flat with Tuesday’s settlement price of $68.53. The 52-week range on October futures is $49.20 to $71.63.

Week over week, U.S. crude oil exports rose by 624,000 barrels a day last week, and U.S. production was flat at 11 million barrels a day. Exports averaged 1.78 million barrels a day last week and have a cumulative daily average for the year of 1.8 million barrels a day, a 132% increase over the year-ago export total.

Distillate inventories fell by 800,000 barrels last week and are about 8% below the five-year average range for this time of year. Distillate product supplied averaged 4.1 million barrels a day for the past four weeks, up by 200,000 barrels compared with the prior week’s average. Distillate production averaged 5.2 million barrels a day last week, down by 200,000 barrels compared to the prior week’s production.

For the past week, crude imports averaged 7.5 million barrels a day, down by just 33,000 compared with the previous week. Refineries were running at 96.3% of capacity, with daily input averaging 17.6 million barrels a day, about 326,000 less than the previous week’s average. Exports of refined products fell by 526,000 barrels a day last week to 4.85 million barrels a day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.837, up a penny from $2.827 a week ago and down by two cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.378 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 0.1%, at $80.37 in a 52-week range of $72.16 to $89.30. Over the past 12 months, Exxon stock has traded up about 5%.

Chevron Corp. (NYSE: CVX) traded up about 0.3%, at $120.26 in a 52-week range of $107.10 to $133.88. As of last night’s close, Chevron shares are trading up about 11.4% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded up about 0.5%, at $14.50 in a 52-week range of $9.36 to $15.25.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 0.2%, at $25.10 in a 52-week range of $21.89 to $29.87.