US: EIA Petroleum Status Report

Wed Sep 13 09:30:00 CDT 2017

Actual Previous
Crude oil inventories (weekly change) 5.9M barrels 4.6M barrels
Gasoline (weekly change) -8.4M barrels -3.2M barrels
Distillates (weekly change) -3.2M barrels -1.4M barrels

Crude oil inventories rose by a smaller-than-expected 5.9 million barrels in the September 8 week to 468.2 million, 2.5 percent below their level a year ago. Product inventories fell sharply, with gasoline down 8.4 million barrels to 218.3 million, 4.4 percent below last year at this time, and distillates down 3.2 million barrels to 144.6 million, off 11.2 percent from the year ago level. Analysts had expected a larger build in crude inventories of around 10 million barrels, but smaller declines in the inventories of products. However, a report from the American Petroleum Institute, a private industry group, showed a crude oil build and product declines more in line with the EIA data. As in the prior week, the crude oil inventory build up and product declines were a result of Hurricane Harvey, which prompted Texas oil companies in the affected area to temporarily close down their refinery operations.

Refineries operated at 77.7 percent of their operating capacity, 2 percentage points below the prior week's level. But gasoline production rose to 9.9 million barrels per day, 400,000 barrels per day more than in the prior week. This came at the expense of distillate production, which fell to an average of 4.0 million barrels per day from 4.5 million.

Daily crude oil imports continued in their decline, falling by 603,000 barrels per day from the prior week to 6.5 million barrels per day, taking the 4-week average down to 7.6 million barrels per day, 7.4 percent below the level during the same period last year.

The demand side continued to soften gently, with total product supplied over the last 4 weeks averaging 20.4 million barrels per day, down 0.8 percent from last year at this time. Motor gasoline supplied was slightly higher, however, averaging 9.6 million barrels per day, 0.2 percent above the level in the year ago period. Distillate fuel supplied declined marginally to a still large 4.0 million barrels per day, up 10.4 percent from last year.

Crude oil inventories and their product counterparts are likely to exchange roles in the coming weeks as refineries gradually fire up again and refine the accumulated crude supplies away.

The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced here or abroad. The level of inventories helps determine prices for petroleum products.

Petroleum product prices are determined by supply and demand - just like any other good and service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices - or price increases for a wide variety of petroleum products such as gasoline or heating oil. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much. During a period of sluggish economic activity, demand for crude oil may not be as strong. If inventories are rising, this may push down oil prices.

Crude oil is an important commodity in the global market. Prices fluctuate depending on supply and demand conditions in the world. Since oil is such an important part of the economy, it can also help determine the direction of inflation. In the U.S., consumer prices have moderated whenever oil prices have fallen, but have accelerated when oil prices have risen.