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Oil Price Gains 3.4% for the Day: What's Behind the Rise?

Oil markets rose on Wednesday, driven by a less-than-anticipated weekly increase in U.S. crude inventories.

Below we review the EIA's Weekly Petroleum Status Report for the week ending Nov 15.

Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 1.4 million barrels, compared to the 1.6 million barrels increase that energy analysts had expected. Record U.S. crude production, which held steady at a whopping 12.8 million barrels per day, largely drove the stockpile build with the world's biggest oil consumer. However, the drawdown was capped below projections as refineries ramped up output.

This puts the total domestic stocks at 450.4 million barrels – 0.8% above the year-ago figure and 3% higher than the five-year average.

The oil market also drew some support from stockpile draw at the Cushing terminal in Oklahoma. The key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange saw inventories fall 2.3 million barrels to 44.2 million barrels.

The crude supply cover was down from 28.3 days in the previous week to 28.1 days. In the year-ago period, the supply cover was 27 days.

Turning to products, and it is a fairly mixed story.

Gasoline: Gasoline supplies increased for the second time in eight weeks. The fuel’s 1.8 million barrels rise is attributable to lower demand, which went down by 129,000 barrels to 9.2 million barrels per day. Analysts had forecast 750,000 barrels climb. At 220.8 million barrels, the current stock of the most widely used petroleum product is 2% below the year-earlier level but exceeds the five-year average range by 2%.

Distillate: Distillate fuel supplies (including diesel and heating oil) were down a ninth consecutive week. The 974,000 barrels decline was less than the inventory draw of 1.4 million barrels that analysts were looking for. Current supplies – at 115.7 million barrels – are 2.9% lower than the year-ago level and remain 11% below than the five-year average.

Refinery Rates: Refinery utilization was up 1.7% from the prior week to 89.5%.

About the Weekly Petroleum Status Report

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as ExxonMobil XOM, Chevron CVX and ConocoPhillips COP and refiners such as Valero Energy VLO and Marathon Petroleum MPC.

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