Crude inventory normally falls in December
The crude oil inventory fell in December. According to data compiled by the EIA (U.S. Energy Information Administration), December usually witnesses a fall in the crude oil inventory. The exceptions were 2008 and 2014, as both were followed by a financial crisis and an OPEC (Organization of the Petroleum Exporting Countries) crisis. One reason for low inventory is that oil companies are reducing the inventory levels of crude. This lowers their taxes. Normally, oil companies delay oil imports during December. They convert their idle oil to crude derivatives or use other methods to reduce the idle amount of crude oil lying in storage.
The above table shows the oil inventories as of December 18.
The data released by the EIA shows that the total crude oil inventory fell by 5.9 MMbbls (million barrels). Commercial crude oil stocks were at 484.4 MMbbls on December 18—compared to 490.7 MMbbls on December 11. However, during the third week of December in 2014, the stockpiles were 387.2 MMbbls. The data discussed above excludes the SPR (strategic petroleum reserves). It contains crude oil inventory data for commercial purposes.
The SPR stood at 695.1 MMbbls as of December 18 as well as December 11. Last year, the SPR were at 691.1 MMbbls.
The refining capacity utilization remained at 92.7% for the four weeks ending December 18. Phillips 66 (PSX), Marathon Petroleum (MPC), Tesoro (TSO), and Valero Energy (VLO) represent large-capped US-based (SPY) refineries.
In the next part, we’ll discuss moving averages and analysts’ estimates for downstream companies.