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U.S. Oil Producers Churn Out Unprecedented Level of Oil

Oil markets fell on Thursday, dragged down by a third straight weekly increase in U.S. crude inventories on the back of record high production.

Below we review the EIA's Weekly Petroleum Status Report for the week ending Nov 8.

Crude Oil: The federal government’s EIA report revealed that crude inventories rose by 2.2 million barrels, compared to the 1 million barrels increase that energy analysts had expected. Surging production, which climbed to yet another record high of 12.8 million barrels per day, largely drove the bigger-than-anticipated stockpile build with the world's biggest oil consumer. This puts the total domestic stocks at 449 million barrels – 1.6% above the year-ago figure and 3% higher than the five-year average.

Meanwhile, the oil market 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 1.2 million barrels to 46.5 million barrels.

The crude supply cover – at 28.3 days – was unchanged from the previous week. 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 first time in seven weeks. The fuel’s 1.9 million barrels rise is attributable to higher production, which went up by 137,000 barrels to 10.2 million barrels per day. Analysts had forecast 1.7 million barrels decline. At 219.1 million barrels, the current stock of the most widely used petroleum product is 3.3% 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 an eighth consecutive week on higher demand. The 2.5 million barrels decline was more than the inventory draw of 1.6 million barrels that analysts were looking for. Current supplies – at 116.7 million barrels – are 2.2% lower than the year-ago level and remain 10% below than the five-year average.

Refinery Rates: Refinery utilization was up 1.8% from the prior week to 87.8%.

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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