Crude Oil Price Drops, Bounces Following Inventory Report

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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 increased by 8 million barrels last week, maintaining a total U.S. commercial crude inventory of 404 million barrels. The commercial crude inventory is equal to the five-year average for this time of year. This week’s increase is the largest of the year to date.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories increased by about 907,000 barrels in the week ending September 28. Gasoline inventories decreased by 1.7 million barrels and distillate stockpiles slipped by about 1.2 million barrels. For the same period, analysts expected crude inventories to increase by about 1.13 million barrels. Gasoline inventories were seen up about 1.16 million barrels, and distillate inventories were expected to fall by about 1.67 million barrels.

Following a run-up of around $5 a barrel over the past two weeks, benchmark West Texas Intermediate (WTI) for November delivery traded down about 0.4% Wednesday morning. A Reuters report this morning indicated that Saudi Arabia and Russia had agreed to lift production as Iranian exports decline due to coming U.S. sanctions. Traders have been concerned that supply would fall well below demand, but the damage may be limited by increased production from Saudi Arabia, Russia, and, of course, the United States.

Total gasoline inventories decreased by 500,000 barrels last week, according to the EIA, and are about 7% above the five-year average range. U.S. refineries produced about 10 million barrels of gasoline a day last week, up by 200,000 barrels compared with the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9.3 million barrels a day for the past four weeks, down by about 200,000 barrels compared with the prior week’s average.

Before the EIA report, WTI crude for November delivery traded down about 0.4% at around $74.92 a barrel, and it traded at $74.39 shortly after the report’s release. WTI for November delivery opened at $75.15 Wednesday morning, down about 0.1% from Tuesday’s settlement price of $75.23. The 52-week range on November futures is $51.27 to $75.91.

Week over week, U.S. crude oil exports fell by 917,000 barrels a day and U.S. production remained unchanged at 11.1 million barrels a day. Exports averaged 1.72 million barrels a day last week and have a cumulative daily average for the year of 1.83 million barrels a day, a 124% increase over the year-ago export total.

Distillate inventories fell by 1.8 million barrels last week and are about 3% 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, down by about 100,000 barrels compared with the prior week’s average. Distillate production averaged 5 million barrels a day last week, flat compared to the prior week’s production.

For the past week, crude imports averaged 8 million barrels a day, up by 163,000 barrels a day compared with the previous week. Refineries were running at 90.4% of capacity, with daily input averaging 16.6 million barrels a day, about 77,000 barrels a day more than the previous week’s average. Exports of refined products jumped by 478,000 barrels a day last week to 5.68 million barrels a day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.902, up 3.5 cents from $2.867 a week ago and by 6.5 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.543 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 less than 0.1%, at $86.42 in a 52-week range of $72.16 to $89.30. Over the past 12 months, Exxon stock has traded up about 5.7%.

Chevron Corp. (NYSE: CVX) traded up about 0.3%, at $125.13 in a 52-week range of $108.02 to $133.88. As of last night’s close, Chevron shares are trading up about 5.7% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded flat at $15.88, in a 52-week range of $9.92 to $16.01.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 0.2%, at $25.56 in a 52-week range of $22.73 to $29.87.