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The U.S. Energy Department's weekly inventory release showed that crude stockpiles logged an unexpected decrease, as imports fell even though production climbed to its highest level since 1993. The report further revealed that refined product inventories – gasoline and distillate – rose from their previous week levels despite strengthening demand. Meanwhile, refiners scaled down their utilization rates by 1.2%.

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, such as ExxonMobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Valero Energy Corp. (VLO) and Tesoro Corp. (TSO).

Analysis of the Data

Crude Oil: The federal government’s EIA report revealed that crude inventories fell by 951,000 barrels for the week ending January 11, 2013, following a climb of 1.31 million barrels in the previous week.

The analysts surveyed by Platts – the energy information arm of McGraw-Hill Companies Inc. (MHP), had expected oil stocks to go up some 2.5 million barrels. A sharp drop in the level of imports led to the surprise stockpile drawdown with the world's biggest oil consumer even as refiners reduced their utilization rates and domestic production continued to spike, now at their highest level since 1993.

However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was up 1.78 million barrels from the previous week’s level to hit a new all-time high of 51.86 million barrels.

At 360.30 million barrels, current crude supplies are 8.8% above the year-earlier level, and comfortably exceed the upper limit of the average for this time of the year. The crude supply cover was up slightly from 23.5 days in the previous week to 23.6 days. In the year-ago period, the supply cover was 22.5 days.

Gasoline: Supplies of gasoline were up for the eighth time in as many weeks despite an improvement in domestic consumption and lower imports. The rise in gasoline inventories could be attributed to higher production.

The 1.91 million barrels gain – compared to analysts’ projections for a 3.0 million barrels increase in supply level – took gasoline stockpiles up to 234.99 million barrels. As a result of this build, the existing inventory level of the most widely used petroleum product is 3.3% higher than the year-earlier level and is well above the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) climbed 1.69 million barrels last week, slightly higher than the analysts’ expectations for a 1.6 million barrels build in inventory level. The rise in distillate fuel stocks – the sixth in 7 weeks – could be attributed to a pile up in the ultra-low sulfur diesel (:ULSD) category, partially offset by stronger demand.

At 132.43 million barrels, distillate supplies are 10.5% below the year-ago level and are close to the lower limit of the average range for this time of the year.

Refinery Rates: Refinery utilization was down 1.2% from the prior week to 87.9%. The analysts were expecting the refinery run rate to edge down by 0.1%.