US: EIA Petroleum Status Report

Wed Dec 20 09:30:00 CST 2017

Actual Previous
Crude oil inventories (weekly change) -6.5M barrels -5.1M barrels
Gasoline (weekly change) 1.2M barrels 5.7M barrels
Distillates (weekly change) 0.8M barrels -1.4M barrels

Crude oil inventories fell 6.5 million barrels in the December 15 week to 436.5 million, 10.1 percent below the level a year ago. But product inventories increased, with gasoline up 1.2 million barrels to 227.8 million, 0.4 percent below last year's level, and distillates up 0.8 million barrels to 128.8 million, down 16.1 percent year-on-year. The drawdown in crude oil reported today by the EIA was larger than the 5.2 million decrease reported yesterday by the American Petroleum Institute (API), a private industry group, but that report also included a small total drawdown for products in contrast with the EIA's build in products. WTI prices fell about 20 cents to around $57.50 per barrel immediately following the release of today's EIA data.

Refineries ramped up operations to 94.1 percent of their operable capacity, 0.7 percentage points above last week's level. But product production volumes fell slightly nevertheless, averaging 10.1 million barrels per day for gasoline and 5.2 million barrels per day for distillates.

Crude oil imports rose by 471,000 barrels per day during the week to a daily average of 7.8 million barrels. Over the last four weeks, imports averaged 7.4 million barrels per day, 6.2 percent less than in the same period last year.

The demand side remained firm, with total product supplied averaging 20.3 million barrels per day, up 2.6 percent from last year. The daily average for gasoline supplied over the period was 9.0 million barrels, up 0.4 percent from the same period last year. Distillate fuel product supplied averaged 4.0 million barrels per day, down 1.2 percent from last year at this time.

As has been the case in recent weeks, today's report shows 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 with current oil prices at 2-year highs and well above most U.S. breakeven rates, new shale oil exploration and development activities are bound to continue, increasing domestic production and supply at an even faster pace.

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.