US: EIA Petroleum Status Report

Wed Nov 15 09:30:00 CST 2017

Actual Previous
Crude oil inventories (weekly change) 1.9M barrels 2.2M barrels
Gasoline (weekly change) 0.9M barrels -3.3M barrels
Distillates (weekly change) -0.8M barrels -3.4M barrels

Crude oil inventories rose by 1.9 million barrels in the November 10 week to 459.0 million, 6.4 percent below the level a year ago. Product inventories were mixed, with gasoline up 0.9 million barrels to 210.4 million, 5.1 percent below last year's level, but distillates down 0.8 million barrels to 124.8 million, a year-on-year decline of 15.3 percent. The rise in crude oil inventories reported by the EIA was much smaller than the 6.5 million barrel increase reported yesterday to subscribers by the American Petroleum Institute (API), a private industry group. WTI prices, which had been under pressure subsequent to the API data, fell another 20 cents to around $54.90 per barrel immediately following the release of the EIA report but quickly bounced back to around $55.30.

Refineries ramped up operation by another 1.4 percentage points during the week to 91.0 percent of their operable capacity. Gasoline production nevertheless declined, averaging about 9.9 million barrels per day. Distillate production rose slightly, averaging 5.2 million barrels per day.

Crude oil imports rose, averaging 7.9 million barrels per day, up 521,000 barrels per day from the prior week. The 4-week daily average rose to 7.7 million barrels, 2.8 percent less than in the same period last year.

The demand side continues to strengthen and is finally in positive year-on-year territory, with total product supplied over the last four week averaging 20.1 million barrels per day, up 0.5 percent from last year and a 1.3 percentage point improvement on last week's reading. Gasoline supplied averaged 9.4 million barrels per day, up 1.5 percent from the same period last year. Distillate supplied averaged 4.0 million barrels per day, 0.8 percent higher than last year at this time.

Despite the second consecutive weekly increase in crude stocks, the balanced picture in product inventories and the continued strengthening on the demand side shows the previously imbalanced supply-demand situation stabilizing. However, current prices near 2-year highs are bound to stimulate new exploration and development activities, increasing domestic production and supply down the road.

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.