DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate and RBOB futures on the New York Mercantile Exchange cut losses in late morning trade Wednesday in reaction to federal data from the U.S. Energy Information Administration showing commercial crude oil inventories declined for the third consecutive week through Aug. 26 and gasoline stocks fell to the lowest level since November 2021, while the ULSD contract slid more than 3% under pressure from faltering demand and a surprise build in distillate stockpiles.

The midmorning Wednesday inventory report was mixed for the oil complex, showing a larger-than-expected decline in domestic crude and gasoline inventories despite exceptionally weak fuel demand. U.S. gasoline consumption edged higher in the third week of August to 8.591 million barrels per day (bpd) but was still 10% below the same period last year. Over the past four weeks, gasoline demand remained below 9 million bpd -- a full 6% below the five-year average.

Gasoline inventories still fell by a sizable margin in the reviewed week, down 1.2 million barrels (bbl) to 214.5 million bbl -- the lowest level since November 2021 -- mainly driven by a strong pace of exports from Gulf Coast ports. U.S. gasoline exports climbed by 120,000 bpd last week to 1.040 million bpd, up 500,000 bpd from last year.

Distillate stocks, meanwhile, rose 112,000 bbl to 111.7 million bbl, and are now about 23% below the five-year average. Demand for middle of the barrel fuel eroded for the third consecutive week through Aug. 26 to 3.566 million bpd -- the lowest demand rate since the week leading up to the July 4th holiday. Against last year's level, distillate fuel supplied to the U.S. market fell 824,000 bpd or over 18%.

In the crude complex, commercial inventories fell 3.3 million bbl to 418.3 million bbl and are about 6% below the five-year average. Analysts had expected crude stockpiles would fall by just 1.2 million bbl from the prior week. Oil stored at Cushing, Oklahoma, the delivery point for U.S. West Texas Intermediate futures, decreased 523,000 bbl to 25.3 million bbl. The larger-than-expected drawdown was realized even as domestic refiners scaled back run rates by 1.1% to 92.7% of capacity.

U.S. crude oil production rose 100,000 bpd to 12.1 million bpd.

Near 11:45 a.m. EDT, NYMEX WTI October futures fell $0.30 to $91.33 bbl, while September RBOB futures eroded 7.25 cents to $2.6219 gallon, with front-month ULSD futures dropping nearly 9 cents to $3.7300 gallon.

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