Energy Economy

Crude Oil Price Gives Back Some Gains After Inventory Report

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Friday morning, showing that U.S. commercial crude inventories remained essentially unchanged last week, maintaining a total U.S. commercial crude inventory of 441.4 million barrels. The commercial crude inventory remains about 8% higher than the five-year average for this time of year.

Thursday evening, the American Petroleum Institute (API) reported that crude inventories decreased by about 4.5 million barrels in the week ending December 28. Gasoline inventories increased by about 8 million barrels and distillate stockpiles rose by about 4 million barrels. For the same period, analysts expected crude inventories to fall by about 2.3 million barrels. Gasoline inventories were seen up about 2.3 million barrels and distillate inventories were expected to rise by about 2.6 million barrels.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for February delivery traded up about 4% for the day, at around $48.98 a barrel, and it traded at $48.74 shortly after the report’s release. WTI for February delivery opened at $46.88 Friday morning, down about 0.4% from Thursday’s settlement price of $47.09. The 52-week range on February futures is $42.36 to $76.40.

Reports this morning that China and the United States plan to restart discussions to end their trade differences have put some air under crude oil prices. An end to the trade dispute would theoretically bring the global economy out of its current stupor, particularly in demand from China for U.S. crude oil.

Coupled with rising hopes on trade, Saudi Arabia reportedly cut crude oil production by half a million barrels a day last month. The cut is on top of the 1.4 million barrels a day that OPEC and its partners already had agreed to cut beginning this month.

Total gasoline inventories increased by 6.9 million barrels last week, according to the EIA, and are now about 5% above the five-year average range. U.S. refineries produced about 9.5 million barrels of gasoline a day last week, down by around 600,000 barrels compared with the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9.1 million barrels a day for the past four weeks, roughly flat compared with the prior week’s average.

Week over week, U.S. crude oil exports fell by 732,000 barrels a day, and U.S. production was unchanged at 11.7 million barrels a day. Exports averaged 2.23 million barrels a day last week and have a cumulative daily average for the year of 1.97 million barrels a day, a 101% increase over the year-ago export total.

Distillate inventories increased by 9.5 million barrels last week and are now about 7% below the five-year average range for this time of year. Distillate product supplied averaged 4.2 million barrels a day for the past four weeks, down by about 200,000 barrels compared with the prior week’s average. Distillate production averaged 5.6 million barrels a day last week, up by about 200,000 barrels compared with the prior week’s production.

For the past week, crude imports averaged 7.4 million barrels a day, down by 264,000 barrels compared with the previous week. Refineries were running at 97.2% of capacity, with daily input averaging 17.8 million barrels a day, about 410,000 barrels more than the previous week’s average. Exports of refined products fell by 508,000 barrels a day last week to about 5.38 million barrels a day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.259, down nearly four cents from $2.289 a week ago and nearly 20 cents lower than the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.489 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 2.9%, at $70.59 in a 52-week range of $64.65 to $89.30. Over the past 12 months, Exxon stock has traded down by about 18.7%.

Chevron Corp. (NYSE: CVX) traded up about 1.8%, at $110.53 in a 52-week range of $100.22 to $133.88. As of last night’s close, Chevron shares are trading down about 13.8% over the past year.

The United States Oil ETF (NYSEARCA: USO) traded up about 3.2%, at $10.27 in a 52-week range of $9.23 to $16.24.

The VanEck Vectors Oil Services ETF (NYSEAMERICAN: OIH) traded up about 3.9%, at $15.06 in a 52-week range of $13.13 to $29.87.

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