US: EIA Petroleum Status Report

Wed Dec 06 09:30:00 CST 2017

Actual Previous
Crude oil inventories (weekly change) -5.6M barrels -3.4M barrels
Gasoline (weekly change) 6.8M barrels 3.6M barrels
Distillates (weekly change) 1.7M barrels 2.7M barrels

Crude oil inventories fell 5.6 million barrels in the December 1 week to 448.1 million, 7.8 percent below the level a year ago. But product inventories increased, with gasoline up 6.8 million barrels to 220.9 million, 3.8 percent below last year's level, and distillates up 1.7 million barrels to 129.4 million, a year-on-year decline of 17.4 percent. The EIA crude oil drawdown was roughly in line with the 5.5 million barrel drawdown reported yesterday to subscribers by the American Petroleum Institute (API), a private industry group, though the EIA gasoline build was substantially smaller than the API estimated increase of 9.2 million barrels. WTI prices fluctuated without direction around pre-release levels of $56.80 per barrel immediately following the release of the EIA data.

Refineries continued ramping up, operating at 93.8 percent of their operable capacity during the week, 1.2 percentage points above the prior week's level. Gasoline production nevertheless fell, averaging 9.8 million barrels per day, while the production of distillates did rise to an average of 5.4 million barrels per day.

Crude oil imports declined again, falling by 127,000 barrels per day to an average of 7.2 million barrels per day. The 4-week average remained at 7.6 million barrels per day, though this was 4.9 percent less than during the same period last year.

The demand side slightly softened, with total products supplied averaging 19.7 million barrels per day over the last four weeks, up 0.5 percent from the same period last year. The daily average for gasoline supplied during the period decreased to 9.1 million barrels, 0.5 percent above the level a year ago, while distillates supplied decreased to a daily average of 3.9 million barrels, up 0.6 percent from the same period last year.

The week's report continues to show a U.S. oil market that has moved from oversupply closer to balance due to smaller import volumes, though a slight demand slowdown may be causing some product inventory buildup. Current prices at 2-year highs and above most U.S. breakeven rates are likely to stimulate new shale oil 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.