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Here's What the EIA's Latest Crude Inventory Report Revealed

U.S. oil prices gained marginally last week, as decrease in crude and fuel supplies, plus storm-related production disruptions outweighed the threat to the commodity’s demand the from resurgence of the coronavirus around the world. For the week, West Texas Intermediate (WTI) crude futures edged up 0.7% to close at $40.88 per barrel.

Most of the upside pressure can be attributed to data from the Energy Information Administration (EIA) that showed domestic oil stocks fell more than projected for the week ending Oct 9. Additional catalyst came from supply disruptions from Hurricane Delta that hit the U.S. Gulf Coast, which is responsible for 17% of the nation’s total oil production and nearly half of its refining capacity. Energy companies including the Zacks Rank #1 (Strong Buy) Equinor EQNR, Chevron CVX, Murphy Oil MUR, Royal Dutch Shell RDS.A and BP plc BP had their offshore oil and gas operations hampered. Oil stocks also got a boost from speculation around ConocoPhillipsCOP acquisition of Concho Resources CXO.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

But oil price gains were likely limited as the market contends with the surge in coronavirus cases across major economies that raised concerns about a deterioration in the demand outlook. The resumption of supply from Libya, an OPEC+ member that is exempt from production caps, has added to the bearish sentiment in the market.

Analyzing the Latest EIA Report

Below we review the EIA's Weekly Petroleum Status Report for the week ending Oct 9.

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 3.8 million barrels compared to expectations of a 2.3 million-barrel decline. The combination of a drop in domestic production, sharp decline in exports (to a 14-month low) and weaker refinery activity — all related to the Hurricane Delta-led shut-ins in the Gulf of Mexico upstream and downstream facilities — accounted for the bigger-than-expected stockpiledraw with the world's biggest oil consumer.This puts total domestic stocks at 489.1 million barrels —12.5% over the year-ago figure and 11% higher than the five-year average.

But on a bearish note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) increased 2.9 million barrels to 59.4 million barrels — the highest since early May.

The crude supply cover was down from 36.3 days in the previous week to 35.9 days. In the year-ago period, the supply cover was 27.3 days.

Let’s turn to the products now.

Gasoline: Gasoline supplies decreased for the ninth time in 10 weeks. The 1.6-million-barrel draw is attributable to lower production and imports. Analysts had forecast a decline of 1.8 million barrels. At 225.1 million barrels, the current stock of the most widely used petroleum product is around 0.5% lower than the year-earlier level and 1% below five-year average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) decreased for the fourth week in a row. The 7.2 million-barrel plunge reflected an uptick in usage and lower production. Meanwhile, the market looked for a supply draw of 2.5million barrels. Current inventories — at 164.6 million barrels — are 33.3% higher than the year-ago level and 19% higher than the five-year average.

Refinery Rates: Refinery utilization decreased 2% from the prior week to 75.1%.

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Chevron Corporation (CVX): Free Stock Analysis Report
 
ConocoPhillips (COP): Free Stock Analysis Report
 
Murphy Oil Corporation (MUR): Free Stock Analysis Report
 
Concho Resources Inc. (CXO): Free Stock Analysis Report
 
BP p.l.c. (BP): Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report
 
Equinor ASA (EQNR): Free Stock Analysis Report
 
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