US: EIA Petroleum Status Report

Thu Dec 28 10:00:00 CST 2017

Actual Previous
Crude oil inventories (weekly change) -4.6M barrels -6.5M barrels
Gasoline (weekly change) 0.6M barrels 1.2M barrels
Distillates (weekly change) 1.1M barrels 0.8M barrels

Crude oil inventories fell 4.6 million barrels in the December 22 week to 431.9 million, the sixth in a row of mostly large drawdowns that widened the year-on-year decline by 1.0 percentage point to 11.1 percent. But product inventories modestly increased again, with gasoline up 0.6 million barrels to 228.4 million, 0.5 percent above last year's level, and distillates up 1.1 million barrels to 129.9 million, 14.3 percent below last year at this time. Though the crude oil drawdown was smaller than the 6.0 million barrel decrease reported for the week to subscribers yesterday by the American Petroleum Institute (API), a private industry group, WTI prices fluctuated close to pre-release levels of around $59.50 per barrel immediately following the release of today's EIA report.

Refineries ramped up and operated at 95.7 percent of their operable capacity, 1.6 percentage points above last week's level. Production increased as well, averaging 10.2 million barrels per day for gasoline and and 5.5 million barrels per day for distillates.

Crude oil imports rose by 159,000 barrels per day during the week to a daily average of 8.0 million barrels. But over the last four weeks, imports averaged 7.6 million barrels per day, 5.9 percent below the level during the same period last year.

The demand side continued to strengthen, with total product supplied over the last four weeks averaging 20.6 million barrels per day, up 3.5 percent from last year at this time. The daily average for gasoline supplied over the period was 9.2 million barrels, up 2.0 percent from the same period last year. Daily distillate fuel product supplied averaged 4.1 million barrels, up 0.7 percent from the comparable 4-week period last year.

Today's report shows the U.S. oil market continuing to move closer to balance after being oversupplied in the first half of the year, with inventories of both crude oil and distillates in large year-on-year declines due mostly to smaller crude oil import volumes and partly due to a pickup in previously stagnant demand. 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, accelerating the pace of growing domestic production.

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.