US: EIA Petroleum Status Report

Wed Oct 25 09:30:00 CDT 2017

Actual Previous
Crude oil inventories (weekly change) 0.9M barrels -5.7M barrels
Gasoline (weekly change) -5.5M barrels 0.9M barrels
Distillates (weekly change) -5.2M barrels 0.5M barrels

Sharp declines in product inventories overshadowed a small increase in crude oil stocks, which rose 0.9 million barrels in the October 20 week to 457.3 million, 2.3 percent below the level a year ago. But inventories of gasoline fell 5.5 million barrels to 216.9 million, 3.4 percent below the year ago level, while distillates fell 5.2 million barrels to 129.2 million, down 15.2 percent year-on-year. WTI prices rose about 20 cents to around $52.35 per barrel immediately following the release of the report.

Refineries operated at 87.8 percent of their operable capacity in the week, up 3.3 percentage points from the prior week as Gulf of Mexico production idled by Hurricane Nate gradually rebooted. Gasoline production nevertheless decreased, averaging 9.9 million barrels per day, while distillate production did rise slightly, averaging 4.8 million barrels per day.

Average daily crude imports rose sharply by 640,000 barrels to 8.1 million, putting the 4-week average at 7.6 million barrels per day, 3.2 percent above last year at this time.

The demand side softened, with total product supplied over the last four weeks averaging 19.6 million barrels per day, down 3.6 percent from the same period last year. Motor gasoline supplied during the period average 9.3 million barrels per day, up 1.6 percent from the same period last year, while distillate fuel product supplied average 3.8 million barrels per day, 6.5 percent below last year's level.

The fall registered in product inventories probably reflects the fact that refineries have not yet recovered to pre-hurricane capacity, and points to the near term resumption of the steady and steep decline in crude oil inventories since April. This decline, driven mostly by OPEC production cuts, has brought supply-demand close to equilibrium and lifted oil prices close to 5-month highs. However, at $52 per barrel, shale oil exploration and development activity becomes quite lucrative again, increasing production down the road, restocking inventories, and probably capping further price increases.

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.