Oil Price Slips as EIA Reports Surprise Rise in U.S. Supplies
US oil prices eased Thursday as rising inventory levels and confusion over the stimulus package outweighed the decline in fuel supplies and storm-induced disruption to production. On the New York Mercantile Exchange, WTI crude oil futures lost 72 cents, or 1.8%, to trade at $ 39.95 a barrel.
Most of yesterday's downward pressure came from data from the Energy Information Administration (EIA) showing domestic oil stocks rose last week, breaking the three-week series of declines. Additional pressure came from the fading prospects for a second stimulus measure to support the economy.
Losses were likely limited, however, as the oil market braced itself for possible disruptions to supplies from the Hurricane Delta approaching the U.S. Gulf Coast, which accounts for 17% of the country's total oil production and nearly half of its refining capacity. Energy companies like Zacks Rank # 2 (Buy) Equinor EQNR, Chevron CVX, BHP Group BHP, Murphy Oil MUR, Royal Dutch Shell RDS.A, and BP plc BP have evacuated the crew from their offshore oil and gas platforms. The oil was also helped by the decline in fuel supplies (gasoline and distillate).
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Analysis of the latest EIA report
Below we review the weekly oil status report from the EIA for the week ending October 2nd.
Crude Oil: The federal government's EIA report found that crude oil inventories were up 501,000 barrels compared to expectations of a 2 million barrels draw. The combination of a significant surge in imports, an increase in domestic production and a sharp decline in exports was responsible for the surprising inventory of the world's largest oil consumer, although refining activity improved. This brings total domestic inventories to 492.9 million barrels - 15.8% more than last year and 12% more than the five-year average.
The latest report showed that shipments at the Cushing Terminal (the main delivery hub for US crude oil futures traded on the New York Mercantile Exchange) rose 470,000 barrels to 56.5 million barrels.
The crude oil supply fell from 37 days in the previous week to 36.3 days. In the same period of the previous year, coverage was 26.2 days.
Now let's turn to the products.
Gasoline: Gasoline supplies decreased for the eighth time in nine weeks. The draw of 1.4 million barrels is due to higher demand. Analysts had forecast a decline of 800,000 barrels. At 226.7 million barrels, the current inventory of the most frequently used oil product is around 1% below the previous year's level, but is close to the five-year average.
Distillate: Distillate fuel supplies (including diesel and heating oil) declined for the third straight week. The 962,000 barrel decrease reflected an increase in usage. In the meantime, the market was looking for an offer withdrawal of 2.9 million barrels. Current inventories are at 171.8 million barrels, 35% above the previous year's level and 23% above the five-year average.
Refining Rates: Refinery utilization rose 1.3% from the previous week to 77.1%.
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Chevron Corporation (CVX): Free Stock Research Report
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