Oil Price Stays Elevated Despite Fed's Interest Rate Warning
U.S. oil prices on Thursday pulled back slightly in reaction to the Federal Reserve's hawkish shift in tone. While the central bank held interest rates steady as widely expected, it signaled another hike this year to tackle stubborn inflation. This is expected to drive up the greenback, making dollar-denominated crude oil a less-desirable asset.
Meanwhile, a weekly report from the Energy Information Administration ("EIA") showing a bigger-than-expected decline in crude stockpiles limited the downside.
On the New York Mercantile Exchange, WTI crude futures lost 92 vents (or 1%) to close at $90.28 a barrel yesterday.
With oil remaining around $90 per barrel — a healthy enough level for market participants —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 Sep 15.
Analyzing the Latest EIA Report
Crude Oil: The federal government’s EIA report revealed that crude inventories fell 2.1 million barrels compared to analyst expectations of a 700,000 barrels decrease. The stockpile draw with the world’s biggest oil consumer was largely thanks to the jump in exports, in tandem with lower imports. These factors more than offset the continued high domestic production, which, at 12.9 million barrels per day, is at the highest since March 2020.
Total domestic stock now stands at 418.5 million barrels — 0.5% less than the year-ago figure and 3% less 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 2.1 million barrels to 22.9 million barrels — the lowest since July 2022.
Meanwhile, the crude supply cover — at 25.2 days — remained unchanged from the previous week. In the year-ago period, the supply cover was 26.7 days.
Let’s turn to the products now.
Gasoline: Gasoline supplies decreased for the fifth time in seven weeks. The 831,000-barrel fall was primarily attributable to a combination of higher usage, a dip in imports and strong exports. Analysts had forecast that gasoline inventories would decline 2.9 million barrels. At 219.5 million barrels, the current stock of the most widely used petroleum product is essentially at the year-earlier level, while it is 3% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell after five consecutive weeks of rises. The 2.9 million-barrel decrease primarily reflected a pullback in exports. Meanwhile, the market looked for a supply drop of 1.6 million barrels. Despite last week’s draw, current inventories — at 119.7 million barrels — are 2% above the year-ago level, though they are 14% lower than the five-year average.
Refinery Rates: Refinery utilization, at 91.9%, fell 1.8% 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: It 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 $458.7 million. Solaris Oilfield Infrastructure has seen its shares move up 5.1% in a year.
CVR Energy: It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. Over the past 60 days, CVR Energy saw the Zacks Consensus Estimate for 2023 move up 32.8%.
CVR Energy is valued at around $3.4 billion. CVI has seen its shares gain 15.9% in a year.
Helix Energy Solutions Group: Over the past 60 days, Helix Energy Solutions Group saw the Zacks Consensus Estimate for 2023 move up 4.3%. The 2023 Zacks Consensus Estimate for HLX indicates 200% year-over-year earnings per share growth.
Helix Energy Solutions Group is valued at around $1.6 billion. HLX has seen its shares surge 160% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CVR Energy Inc. (CVI) : Free Stock Analysis Report
Helix Energy Solutions Group, Inc. (HLX) : Free Stock Analysis Report
Solaris Oilfield Infrastructure, Inc. (SOI) : Free Stock Analysis Report
