DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange moved lower early afternoon Friday, with prompt-month RBOB initially advancing after inventory data from the Energy Information Administration showed an unexpected drop in gasoline supplies and improved demand for refined fuels during the week ended Jan. 15 as refiners ramped up run rates for the fourth consecutive week.

Near 12:30 p.m. EST, NYMEX March West Texas Intermediate declined 75 cents to $52.37 barrel (bbl), with Intercontinental Exchange traded March Brent futures down 68 cents near $55.42 bbl. NYMEX February ULSD futures dropped more than 2 cents to trade near $1.5792 gallon, with February RBOB futures declining 0.60 cents to $1.5416 gallon.

EIA inventory data delayed to Friday due to Inauguration Day, showed implied demand for motor gasoline gained 580,000 barrels per day (bpd) during the week ended Jan. 15 to above 8 million bpd. Gasoline supplied to the U.S. market trended lower into the start of the year, raising concerns over unrealized recovery in fuel consumption as the labor market struggles to recover from the pandemic-induced blow. Gasoline stockpiles unexpectedly dropped 259,000 bbl from the previous week to 245.217 million bbl but remain near the highest level since early August when the stocks were at 247.084 million bbl. Distillate stocks climbed by a modest 457,000 bbl to 163.7 million bbl and are now about 8% above the 5-year average, the EIA said. Markets, however, forecasted distillate stocks to increase by a much steeper 1.1 million bbl from the previous week. Implied demand for distillates also increased by 212,000 bpd to 3.821 million bpd.

Offsetting encouraging signs in refined fuels, U.S. crude inventories posted its first build since early December last week that also exceeded estimates for a more modest increase from the American Petroleum Institute. U.S. commercial crude supplies added 4.352 million bbl during the reviewed week to 486.6 million bbl and are now about 9% above the 5-year average. Markets expected crude stockpiles would fall 1.3 million bbl in the reviewed week.

The build was realized as domestic refiners hiked crude inputs by 110,000 bpd to 14.76 million bpd, with utilization rates up 0.5% to 82.5% -- the highest run rate since mid-March 2020.

Stockpiles at Cushing, Oklahoma, the delivery point for the West Texas Intermediate contract, fell by 4.7 million bbl from the previous week to 52.5 million bbl, EIA said.

Domestic crude oil production remained unchanged on the week at 11 million bpd, according to the EIA. The agency expects crude output to average 11.1 million bpd for 2021 before rising to 11.5 million bpd in 2022, which compare with a 2020 output rate of 12.2 million bpd.

Liubov Georges can be reached at liubov.georges@dtn.com