EIA Reports a Big Draw in Oil Stocks as Refinery Runs Pick Up
U.S. oil prices fell yesterday on concerns over China’s demand and the possibility of more rate hikes in the near future. However, a weekly report from the Energy Information Administration ("EIA") showing a bigger-than-expected decline in crude stockpiles helped to ease some worries over the commodity’s demand outlook.
On the New York Mercantile Exchange, WTI crude futures lost 75 vents (or 0.9%) to close at $78.89 a barrel yesterday.
Despite oil’s slide, it remains around $80 per barrel – a healthy enough level for market participants. In fact, investors interested in the sector could benefit from having quality stocks like Solaris Oilfield Infrastructure SOI, CVR Energy CVI and Helix Energy Solutions Group HLX.
Let's dig deep into the Energy Information Administration’s ("EIA") Weekly Petroleum Status Report for the week ending Aug 18.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories fell 6.1 million barrels compared to expectations of 4.24 million barrels decrease per the analysts surveyed by S&P Global Commodity Insights. The stockpile draw with the world’s biggest oil consumer was largely thanks to rising U.S. refinery runs that reached 16.78 million barrels per day last week, the highest in more than three and a half years. This more than offset the spike in domestic production, which, at 12.8 million barrels per day, was the most since March 2020.
Total domestic stock now stands at 433.5 million barrels — 2.8% more than the year-ago figure but 2% lower than the five-year average.
The latest report also showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) dropped 3.1 million barrels — the biggest in nearly two years — to 30.7 million barrels.
Meanwhile, the crude supply cover decreased from 26.5 days in the previous week to 26 days. In the year-ago period, the supply cover was 25.9 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies increased for the first time in three weeks. The 1.5-million-barrel addition was attributable to higher production and imports. Analysts had forecast that gasoline inventories would fall 1.15 million barrels. At 217.6 million barrels, the current stock of the most widely used petroleum product is marginally (0.9%) more than the year-earlier level, while it is 5% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) rose for the second week in a row. The 945,000-barrel increase primarily reflected an increase in production. Meanwhile, the market looked for an unchanged supply level. Following last week’s build, current inventories — at 116.7 million barrels — are 4.6% above the year-ago level but 16% lower than the five-year average.
Refinery Rates: Refinery utilization, at 94.5%, ticked down 0.2% from the prior week.
3 Energy Stocks to Buy
Having gone through the Weekly Petroleum Status Report, investors interested in the energy space might consider the operators mentioned below. These companies currently sport a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Solaris Oilfield Infrastructure: SOI beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters at an average of 18.8%.
SOI is valued at around $477.3 million. Solaris Oilfield Infrastructure has seen its shares move down 5.9% in a year.
CVR Energy: CVI beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. Over the past 30 days, CVR Energy saw the Zacks Consensus Estimate for 2023 move up 32.8%.
CVR Energy is valued at around $3.5 billion. CVI has seen its shares lose 1.2% in a year.
Helix Energy Solutions Group: Over the past 30 days, Helix Energy Solutions Group saw the Zacks Consensus Estimate for 2023 move up 4.3%. The 2023 Zacks Consensus Estimate HLX indicates 200% year-over-year earnings per share growth.
Helix Energy Solutions Group is valued at around $1.4 billion. HLX has seen its shares surge 114.6% in a year.
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