U.S. oil prices rose on Wednesday, buoyed by an increase in refinery runs that led to a decline in weekly crude supplies. However, builds in fuel stocks offset come of that gain. On the New York Mercantile Exchange, WTI crude futures gained 79 cents (or 1.1%) to close at $72.53 a barrel yesterday. Prices were also helped by data that showed rising oil demand in China, the world's biggest crude importer.
Some oil-related stocks that could benefit in the current environment are NOW Inc. DNOW, 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 2.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories inched down 452,000 barrels compared to expectations of a one million barrel 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 the ramp-up of refinery output and lower imports, even as domestic production reached its highest since April 2020.
Total domestic stock now stands at 459.2 million barrels — 10.2% 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) increased 1.7 million barrels to 40.6 million barrels.
Meanwhile, the crude supply cover decreased from 28.7 days in the previous week to 28.3 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 first time in five weeks. The 2.7 million-barrel addition was attributable to higher production and imports. Analysts had forecast that gasoline inventories would rise 750,000 barrels. At 218.8 million barrels, the current stock of the most widely used petroleum product is 0.3% more than the year-earlier level, while it is 8% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) rose for just the fourth time in the past 13 weeks. The 5.1 million-barrel increase reflected higher output and a plunge in exports. Meanwhile, the market looked for a supply build of one million barrels. Following last week’s build, current inventories — at 111.7 million barrels — are 2.5% above the year-ago level but 16% lower than the five-year average.
Refinery Rates: Refinery utilization, at 95.8%, moved up 2.7% from the prior week to the highest in about four years.
3 Energy Stocks to Buy
Investors interested in the energy space might look at operators like NOW Inc., 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.
NOW Inc.: DNOW beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. NOW has a trailing four-quarter earnings surprise of 32.1%, on average.
DNOW is valued at around $1 billion. NOW has seen its shares lose 12.4% in a year.
Eni: It is valued at some $50 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 lost 8.4% 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 $56.5 billion. EPD has seen its units fall 7.6% in a year.
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