U.S. Oil Supplies Tighten Amid Lower Imports and Lower Refinery Rates

Strategic Insights -

U.S. oil supplies have taken a significant hit in the week ending December 16, 2011, with a decrease of 10.57 million barrels in crude inventories, according to the Energy Department's weekly inventory release. This marked the second straight weekly decline in crude inventories, with imports hampered by fog delays in the Houston Ship Channel contributing to the plunge. Gasoline supplies, meanwhile, fell for the first time in six weeks, as demand edged higher, while distillate fuel inventories saw a larger-than-expected drawdown due to a rebound in demand.

Key Takeaways:

  • Crude oil inventories decreased by 10.57 million barrels for the week ending December 16, 2011, the second straight weekly decline, with a significant fall in the level of imports from the Houston Ship Channel contributing to the plunge.
  • Gasoline supplies fell for the first time in six weeks, with a modest 412,000 barrels-build taking gasoline stockpiles down to 218.41 million barrels, 0.6% above the year-earlier levels.
  • Distillate fuel inventories decreased by 2.35 million barrels last week, compared with analyst expectations for a much smaller drawdown, with distillate supplies 13.4% below the year-ago level.
  • Refinery utilization was down 0.2% from the prior week at 84.9%, with analysts expecting the refinery run rate to edge up 0.3% to 85.4%.
  • The Energy Information Administration ("EIA") Petroleum Status Report provides an overview of the level of reserves and their movements, helping investors understand the demand/supply dynamics of petroleum products.
  • Companies such as ExxonMobil, Chevron Corp., ConocoPhillips, Valero, and Tesoro are among those effected by the tightening U.S. oil supplies.

Statistics:

  • Crude oil inventories decreased by 10.57 million barrels for the week ending December 16, 2011.
  • Gasoline supplies fell to 218.41 million barrels, with a build of 412,000 barrels.
  • Distillate fuel inventories decreased by 2.35 million barrels last week.
  • Crude supplies are 5.0% lower than the year-ago level, but are in the upper limit of the average for this time of year.
  • The crude supply cover was down from 22.6 days in the previous week to 21.9 days.
  • Refinery utilization was down 0.2% from the prior week at 84.9%.

Sources:

  • Energy Department's weekly inventory release
  • Platts
  • Energy Information Administration ("EIA") Petroleum Status Report
  • Zacks Investment Research
  • Zacks Equity Research
  • Zacks.com
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