Crude Oil Price Dips on Larger-than-Expected Inventory Build

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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 4.9 million barrels last week, maintaining a total U.S. commercial crude inventory of 446.9 million barrels. The commercial crude inventory is now about 6% higher than the five-year average for this time of year.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories decreased by about 1.55 million barrels in the week ending November 17. Gasoline inventories increased by 706,000 barrels and distillate stockpiles dropped by about 1.8 million barrels. For the same period, analysts expected crude inventories to increase by about 2.94 million barrels. Gasoline inventories were seen down about 198,000 barrels and distillate inventories were expected to fall by about 2.75 million barrels.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for January delivery traded up about 1.8% for the day at around $54.40 a barrel and traded at $54.28 shortly after the report’s release. WTI for January delivery opened at $53.48 Wednesday morning, up about 0.1% from Wednesday’s settlement price of $53.43. The 52-week range on January futures is $52.77 to $76.55.

Reports early this week suggested that the Saudis and the Russians were discussing cutting production by up to 1.4 million barrels a day. The talks either didn’t result in an agreement or were never held in the first place, and crude tumbled nearly 7% on Tuesday. Even with today’s slight recovery, the price did not touch $55 and probably won’t in the rest of the day’s trading.

Total gasoline inventories decreased by 1.3 million barrels last week, according to the EIA, and are now 6% above the five-year average range. U.S. refineries produced about 10 million barrels of gasoline a day last week, down by around 100,000 barrels compared with the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9.2 million barrels a day for the past four weeks, about flat compared with the prior week’s average.

Week over week, U.S. crude oil exports fell by 81,000 barrels a day last week and U.S. production remained unchanged at 11.7 million barrels a day, its highest level ever. Exports averaged 1.97 million barrels a day last week and have a cumulative daily average for the year of 1.89 million barrels a day, a 104% increase over the year-ago export total.

Distillate inventories fell by 100,000 barrels last week and are about 7% below the five-year average range for this time of year. Distillate product supplied averaged 4.4 million barrels a day for the past four weeks, up by about 100,000 barrels compared with the prior week’s average. Distillate production averaged 5.2 million barrels a day last week, up by about 200,000 barrels a day compared with the prior week’s production.

For the past week, crude imports averaged 7.6 million barrels a day, up by 102,000 barrels a day compared with the previous week. Refineries were running at 92.7% of capacity, with daily input averaging 16.9 million barrels a day, about 423,000 barrels a day more than the previous week’s average. Exports of refined products rose by 797,000 barrels a day last week to about 5.2 million barrels a day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.60, down nearly 7 cents from $2.667 a week ago and down by more than 25 cents compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.526 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 0.9% at $77.63 in a 52-week range of $72.16 to $89.30. Over the past 12 months, Exxon stock has traded down by about 4%.

Chevron Corp. (NYSE: CVX) traded up about 1.2%, at $117.53 in a 52-week range of $108.02 to $133.88. As of last night’s close, Chevron shares are trading up about 2% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded up about 2% at $11.49 in a 52-week range of $11.16 to $16.24.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 1.4% at $18.76 in a 52-week range of $18.32 to $29.87.