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U.S. Crude Supplies at 22-Year High

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The U.S. Energy Department's weekly inventory release showed that crude stockpiles jumped unexpectedly to their highest level since July 1990, as imports climbed. The agency’s report further revealed that refined product inventories – gasoline and distillate – increased from their previous week levels on weaker demand. Meanwhile, refinery utilization rate reflected a decrease of a meager 0.1%.

The Energy Information Administration ("EIA") Petroleum Status Report, which contains data for the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect businesses of companies engaged in the oil and refining industry, such as ExxonMobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero Energy Corp. (VLO) and Tesoro Corp. (TSO).

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 2.86 million barrels for the week ending June 15, 2012, after falling by a modest 191,000 barrels the week before.

Analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go down some 600,000 barrels. A jump in the level of imports and production led to the stockpile build-up with the world's biggest oil consumer.

In particular, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – increased by 360,000 barrels from previous week’s level to 47.76 million barrels. Stocks are just under the all-time high of 47.78 million barrels reached earlier in June.

At 387.30 million barrels, current crude supplies are 6.5% above the year-earlier level, and are over the upper limit of the average for this time of the year. The crude supply cover was down from 25.1 days in the previous week to 25.0 days. In the year-ago period, the supply cover was 24.2 days.

Gasoline: Supplies of gasoline increased for the second time in 3 weeks as domestic consumption edged down 4.8% to 8.69 million barrels a day and imports rose. This was partially offset by lower production.

The 943,000 barrels gain – compared to analyst projections for a 600,000 hike in supply level – took gasoline stockpiles up to 202.74 million barrels. Notwithstanding this increase, existing inventory level of the most widely used petroleum product is still 5.6% below the year-earlier levels and is in the lower limit of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) increased by 1.16 million barrels last week, much larger than analyst expectations for a 600,000 barrel build. The rise in distillate fuel stocks – just the fourth increase in 19 weeks – could be attributed to weaker demand.

At 121.13 million barrels, distillate supplies are 14.7% below the year-ago level and are in the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down a marginal 0.1% from the prior week at 91.9%.  

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