EIA Oil Supply Data Highlights: The Good, The Bad & The Ugly

The fundamentals of supply and demand in the domestic oil market appear to be heading in a bearish direction as inventories continue to rise. Crude has witnessed range-bound prices for WTI between $45 and $50 per barrel most of the past few days. As it is, continued panic over the spreading coronavirus (COVID-19) has intensified the commodity's freefall with futures in New York recently sliding below $45 a barrel.

The U.S. Energy Department's latest inventory release revealed a sixth straight weekly increase in stockpiles though the build was significantly lower than expected. Meanwhile, sharply lower refined product inventories – gasoline and distillate – were also part of the picture.

Below we review the EIA's Weekly Petroleum Status Report for the week ending Feb 28.

Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 784,000 barrels, compared to the 3.5 million barrels increase that energy analysts had expected. Lower refinery crude runs drove the (marginal) stockpile build with the world's biggest oil consumer even as exports surged. This puts the total domestic stocks at 444.1 million barrels – 1.9% below the year-ago figure and 4% lower than the five-year average.

Meanwhile, the oil market drew some support from stockpile draw at the Cushing terminal in Oklahoma. The key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange saw inventories fall 2 million barrels to 37.2 million barrels.

The crude supply cover was up from 27.6 days in the previous week to 27.8 days. In the year-ago period, the supply cover was 28.6 days.

Turning to products, and it is a fairly bullish story.

Gasoline: Gasoline supplies tallied a fifth straight drop. The fuel’s 4.3 million barrels decline is attributable to higher demand. Analysts had forecast 2.8 million barrels draw. At 252 million barrels, the current stock of the most widely used petroleum product is essentially in-line with the year-earlier level and exceeds the five-year average range by 2%.

Distillate: Distillate fuel supplies (including diesel and heating oil) were down for a seventh consecutive week. The 4 million barrels decrease could be attributed to dip in production and imports. Meanwhile, the market had been looking for a supply draw of 2.4 million barrels. Current supplies – at 134.5 million barrels – are 1.1% lower than the year-ago level and remain 7% below the five-year average.

Refinery Rates: Refinery utilization was down by 1% from the prior week to 86.9%.

About the Weekly Petroleum Status Report

The Energy Information Administration (EIA) Petroleum Status Report, containing data of 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 the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as ExxonMobil (NYSE:XOM) , Royal Dutch Shell (LON:RDSa) RDS.A and ConocoPhillips (NYSE:COP) and refiners such as Valero Energy (NYSE:VLO) and Marathon Petroleum (NYSE:MPC) .

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