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Crude Oil Price Dives After EIA Storage Report

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 3.1 million barrels last week, maintaining a total U.S. commercial crude inventory of 461 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years.

Tuesday evening, the American Petroleum Institute (API) reported that crude inventories slipped by 1.2 million barrels in the week ending September 25. For the same period, analysts had estimated an increase of 2.5 million barrels in crude inventories.

Total gasoline inventories increased by 1.9 million barrels last week, according to the EIA, and are now above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged about 9 million barrels a day for the past four weeks, up by 4% compared with the same period a year ago.

On Monday the EIA released its latest version of the Short-Term Energy Outlook. The agency estimated that U.S. crude oil production fell by 120,000 barrels a day month-over-month in September. For the current year, the EIA projects average daily U.S. production of 9.2 million barrels; for 2016 EIA projects 8.9 million barrels a day.

The agency also forecasts retail gasoline prices to tumble from an average of $2.37 a gallon for regular gas to $2.03 in December. For 2016, the EIA projects an average price of $2.38 a gallon.

In the futures market last week, hedge funds did an about-face and added to their short positions on benchmark West Texas Intermediate (WTI) crude oil. In the Commitment of Traders report for September 29, published by the Commodity Futures Trading Commission (CFTC) last Friday, hedge funds added 7,184 short contracts and dumped 6,267 contracts from their long positions. Managed money holds 263,126 long positions, compared with 112,736 short positions. Open interest increased by 11,685 contracts to 1,617,902 week over week.

Before the EIA report, WTI crude for November delivery traded up about 2.3% at around $49.65 a barrel. The WTI price fell to around $48.90 immediately following the report’s release, still up about 0.8% on the day. The 52-week range on WTI futures is $38.51 to $85.20.

Distillate inventories decreased by 2.5 million barrels last week and remain in the middle of the average range for this time of year. Distillate product supplied averaged over 3.9 million barrels a day over the past four weeks, up by 3.7% when compared with the same period last year. Distillate production averaged 5.1 million barrels a day last week, up about 100,000 barrels a day compared with the prior week’s production.

For the past week, crude imports averaged 7.1 million barrels a day, down by 486,000 barrels a day compared with the previous week. Refineries were running at 87.5% of capacity, with daily input of 15.6 million barrels, about 403,000 barrels a day below the previous week’s average.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.297, up more than a penny from $2.285 a week ago and down from $2.399 a month ago. Last year at this time, a gallon of regular cost $3.279 on average in the United States.

Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.

Exxon Mobil Corp. (NYSE: XOM) traded up about 0.9%, at $78.63 in a 52-week range of $66.55 to $97.20. Year to date, Exxon stock traded down about 15% and is down about 19% since early November, as of Tuesday’s close.

Chevron Corp. (NYSE: CVX) traded up about 1.5%, at $88.32 in a 52-week range of $69.58 to $120.17. As of Tuesday’s close, Chevron shares have dropped about 21% year to date and trade down nearly 26.5% since early November.

The United States Oil ETF (NYSEMKT: USO) traded up less than 0.01%, at $15.75 in a 52-week range of $12.37 to $33.09.

The Market Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 1.5% to $31.47, in a 52-week range of $26.00 to $47.11.

By Paul Ausick