US: EIA Petroleum Status Report

Wed Dec 13 09:30:00 CST 2017

Actual Previous
Crude oil inventories (weekly change) -5.1M barrels -5.6M barrels
Gasoline (weekly change) 5.7M barrels 6.8M barrels
Distillates (weekly change) -1.4M barrels 1.7M barrels

Crude oil inventories fell 5.1 million barrels in the December 8 week to 443.0 million, 8.3 percent below the level a year ago. Product inventories were mixed, with gasoline up 5.7 million barrels to 226.5 million, 1.5 percent below last year's level, while distillates fell 1.4 million barrels to 128.1 million, widening the year-on-year drop to 17.9 percent. The EIA crude oil drawdown was significantly smaller than the 7.4 million barrel drop reported yesterday to subscribers by the American Petroleum Institute (API), a private industry group. But WTI prices, which had rallied following yesterday's more bullish API data, remained roughly unchanged at around $57.20 per barrel immediately following the release of today's EIA report.

Refinery operation slackened slightly to 93.4 percent of operable capacity, 0.4 percentage points below last week's level. Production of gasoline rose, however, averaging 10.1 million barrels per day, while the production of distillates did decline, averaging 5.2 million barrels per day.

Crude oil imports rose by 161,00 barrels per day to an average of 7.4 million barrels per day. The 4-week average dropped to 7.4 million barrels per day, 3.3 percent less than was imported during the same period a year ago.

The demand side slightly strengthened, with total product supplied averaging 19.8 million barrels per day over the last four weeks, up 2.1 percent from the same time last year. The daily average for gasoline supplied during the period remained unchanged from last week's reading at 9.1 million barrels, but the year-on-year gain increased by 1.1 percentage points to 1.6 percent. Distillates supplied increased to a daily average of 4.0 million barrels, widening the year-on-year increase by 1.7 percentage points to 2.3 percent.

The week's report continues to show a U.S. oil market that has moved from oversupply closer to balance, with inventories of both crude oil and products, particularly distillates, showing large year-on-year declines due mostly to smaller crude oil import volumes. But the slight pickup in demand seen in this week's report may be the forerunner of increased demand from a U.S. economy that is showing signs of heating up, which would help reduce inventory further. Countering this, however, are current prices at 2-year highs, which are above most U.S. breakeven rates and 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.