U.S. Crude Supplies Slump But Fuel, Cushing Stocks Soar

The U.S. Energy Department's inventory release showed that crude stockpiles fell sharply last week, dragging down the overall surplus.

But strategic supplies at the Cushing, OK storage experienced a big build. On a further bearish note, the report revealed that refined product inventories – gasoline and distillate – both surged from their previous week levels.

Confused with EIA’s mixed data set, energy traders concentrated on the positive vibes generated by the OPEC and non-OPEC countries’ agreement. They believe that the major producers will adhere to their agreed output cut quotas, which will reduce the global inventory glut next year

As a result, West Texas Intermediate (WTI) crude futures edged up 0.9% (or 50 cents) to $53.76 per barrel Thursday.

Analysis of the EIA Data

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 7.05 million barrels for the week ending Dec 30, 2016, following a modest rise of 614,000 barrels in the previous week.

The analysts surveyed by S&P Global Platts – the leading independent commodities and energy data provider – had expected crude stocks to go down some 1.7 million barrels. Lower imports and uptick in refinery demand led to the heavy stockpile draw with the world's biggest oil consumer.

While the inventory reduction will help narrow the year-over-year storage surplus, the U.S. still remains awash with excess oil. At 479.01 million barrels, current crude supplies are up 6% from the year-ago period and are near the upper limit of the average range during this time of the year.

However, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was up 1.07 million barrels from previous week’s level to 67.51 million barrels.

The crude supply cover was down from 29.4 days in the previous week to 28.9 days. In the year-ago period, the supply cover was 29.1 days.

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Chee Hin Teh 3 years ago Member's comment

Thanks and Merry Christmas and Happy New Year