DTN Oil

WASHINGTON (DTN) -- Erasing overnight losses, oil futures nearest delivery on the New York Mercantile Exchange edged higher in reaction to weekly inventory data from the Energy Information Administration released at midmorning which showed total commercial crude and refined products stocks declined by a larger-than-expected 7.7 million barrels (bbl) during the week ended May 21 as refiners hiked throughputs to meet growing demand for gasoline and diesel fuels.

Government data showed crude oil stockpiles fell 1.7 million bbl last week to 484.3 million bbl and are now about 2% below the five-year average. Market consensus called for inventories to fall 900,000 bbl from the prior week, while earlier released data from the American Petroleum Institute showed a much smaller 439,000 bbl draw.

Oil stored at Cushing, the delivery point for the West Texas Intermediate contact, fell 1 million bbl from the previous week to 44.8 million bbl -- the lowest stock level at the Oklahoma site in 14 months.

The larger-than-expected draw was realized as refiners hiked crude throughputs to 15.2 million barrels per day (bpd), up 123,000 bpd from the previous week's revised levels. Refiners operated at 87% of their operable capacity -- the highest run rate since the week ended March 19, 2020.

Domestic crude oil production remained unchanged at 11 million bpd.

In refined fuels, gasoline stocks at 232.5 bbl as of May 21 were down 1.7 million bbl from the previous week's level, while about 3% below the five-year average. Demand for gasoline jumped above 9 million bpd for the second week in a row to a 14-month high 9.479 million bpd. The recent gains in nationwide gasoline use, however, follow panic buying tied to the Colonial Pipeline outage, meaning sharp increases will likely fade in the coming weeks.

Distillate stocks were also drawn down above market expectations, down by a hefty 3 million bbl to 129.1 million bbl and are now 8% below the five-year average. Earlier in the week, analysts expected distillate supplies would fall by 1.5 million bbl. Distillate fuel supplied to the U.S. market, a measure of demand, jumped 403,000 bpd from the previous week to 4.461 million bpd. Incoming economic data suggest the pace of expansion in both manufacturing and service sectors accelerated sharply this month, which bodes well for the key refined fuels such as diesel and gasoline.

Near the noon hour in New York, NYMEX June ULSD futures were up 0.88 cent to $2.0442 gallon and RBOB June contact gained 1.51 cents to $2.1324 gallon. NYMEX WTI July futures were modestly higher to trade near $66.22 bbl.

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