U.S. crude oil, gasoline, and distillate inventories all declined last week. This occurred as both refining activity and fuel demand increased.
According to the U.S. Energy Information Administration (EIA), crude oil inventories dropped by 2.5 million barrels to 457 million barrels in the week ending May 10. This was a larger draw than the 543,000-barrel decrease that analysts had expected in a Reuters poll.
The inventory decline was driven by a rise in refinery crude runs of 307,000 barrels per day (bpd) and an increase in refinery utilization rates to 90.4 percent of total capacity, up 1.9 percentage points.
Following the report, crude oil futures pared their earlier losses. Brent crude was trading at $82.29 per barrel, down 0.1 percent at 11:02 ET (1502 GMT), while U.S. West Texas Intermediate (WTI) crude was nearly unchanged on the day at $77.99.
U.S. gasoline and diesel futures also recovered some of their earlier declines, with gasoline futures turning positive after a surprise drawdown in inventories.
Read more: U.S. refiners’ profits set to fall in Q1 of 2024, margins remain strong
Gasoline demand lags seasonal norms
Bob Yawger, director of energy futures at Mizuho, commented that “Refiners finally got serious,” though he cautioned that gasoline product supplied, a proxy for demand, remained below seasonal norms ahead of the Memorial Day weekend, which marks the start of the summer driving season.
Gasoline product supplied last week was 8.9 million bpd, up slightly from the previous week. However, the four-week average for gasoline product supplied was 8.7 million bpd, compared to 9.1 million bpd for the same period last year.
Yawger noted that historically, gasoline demand numbers are typically above 9 million bpd at this point in the U.S. heading into Memorial Day weekend, so “it’s hard to paint a rosy picture with gasoline demand still not where it needs to be.”
Gasoline inventories fell by 235,000 barrels to 227.8 million barrels, in contrast with expectations for a 537,000-barrel build.
Distillate stockpiles, which include diesel and heating oil, declined by 45,000 barrels to 116.4 million barrels, versus forecasts for a 824,000-barrel increase.
Distillate product supplied increased by 342,000 bpd to 3.8 million bpd, according to the EIA.
Net U.S. crude imports rose last week by 108,000 bpd, while exports declined by 333,000 bpd to 4.14 million bpd.
Crude stocks at the Cushing, Oklahoma, delivery hub fell by 341,000 barrels.
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