Inventory Build on All Fronts, Fed Stance Push Oil Lower
U.S. oil prices fell on Wednesday after a weekly report from the Energy Information Administration ("EIA") showed builds in crude and fuel stockpiles. On the New York Mercantile Exchange, WTI crude futures lost $1.15 (or 1.7%) to close at $68.27 a barrel yesterday. Prices were also dragged down by the Federal Reserve’s signal that it will raise interest rates twice again this year.
Despite oil’s slide, investors interested in the sector could benefit from having quality stocks like Profire Energy PFIE, Eni S.p.A. E and Enterprise Products Partners EPD.
Let's dig deep into the Energy Information Administration’s ("EIA") Weekly Petroleum Status Report for the week ending Jun 9.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories rose 7.9 million barrels compared to expectations of an unchanged supply level per the analysts surveyed by S&P Global Commodity Insights. The stockpile build with the world’s biggest oil consumer was largely thanks to the strength in domestic production and a pullback in refinery output.
Total domestic stock now stands at 467.1 million barrels — 11.6% more than the year-ago figure but coincides with 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) increased 1.6 million barrels to 40.6 million barrels.
Meanwhile, the crude supply cover increased from 28.3 days in the previous week to 28.5 days. In the year-ago period, the supply cover was 25.8 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies increased for the second week in a row. The 2.1 million-barrel addition was attributable to lower production and weaker demand. Analysts had forecast that gasoline inventories would rise 460,000 barrels. At 220.9 million barrels, the current stock of the most widely used petroleum product is 1.6% more than the year-earlier level, while it is 7% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) rose for just the fifth time in the past 14 weeks. The 2.1 million-barrel increase primarily reflected reduced consumption. Meanwhile, the market looked for a supply build of one million barrels. Following last week’s build, current inventories — at 113.9 million barrels — are 3.8% above the year-ago level but 14% lower than the five-year average.
Refinery Rates: Refinery utilization, at 93.7%, moved down 2.1% from the prior week.
3 Energy Stocks to Buy
Investors interested in the energy space might look at operators like Profire Energy, Eni and Enterprise Products Partners, each carrying a Zacks Rank #2 (Buy) currently.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Profire Energy: The 2023 Zacks Consensus Estimate for Profire Energy indicates 125% year-over-year earnings per share growth. PFIE has a trailing four-quarter earnings surprise of 11.1%, on average.
Profire Energy is valued at around $58.2 million. PFIE has seen its shares lose 6.1% in a year.
Eni: It is valued at some $49.6 billion. The Zacks Consensus Estimate for E’s 2023 earnings has been revised 5.3% upward over the past 30 days.
Eni, headquartered in Rome, Italy, beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in the other. E shares have gained 1.2% in a year.
Enterprise Products Partners: It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. EPD has a trailing four-quarter earnings surprise of 4.1%, on average.
Enterprise Products Partners is valued at around $56.7 billion. EPD has seen its units fall 2.3% in a year.
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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
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