Oil Futures Mixed Following EIA Data

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent futures on the Intercontinental Exchange moved shallowly mixed in early trading Friday amid reports of a large build in commercial crude stocks in the United States, while countered by concern over the potential loss of Venezuelan heavy crude for U.S. Gulf Coast refineries.

NYMEX March West Texas Intermediate futures were up $0.19 near $53.32 per barrel (bbl) just ahead of 11 a.m. EST, with ICE Brent futures advancing $0.13 to $61.22 bbl. February ULSD futures are down 0.21 cent near $1.8835 gallon. February RBOB futures gained 0.27 cent to near $1.3903 gallon.

A holiday-delayed report from Energy Information Administration released Thursday showed an unexpected large build in crude supplies for the first time in three weeks while gasoline inventories extended higher for an eighth week and distillates declined for the first time in five weeks.

EIA reported commercial crude oil inventories jumped 8.0 million bbl to 445.025 million bbl in the week ended Jan. 18, an 8.1% year-over-year supply surplus and about 9% above the five-year average for this time of year.

U.S. crude oil refinery inputs averaged 17.0 million barrels per day (bpd) during the week profiled, down 174,000 bpd from the prior week but 3.4% above year prior. Agency data showed domestic production rose to a record 11.9 million bpd, 20.5% higher than a year ago.

EIA reported domestic refineries operated at 92.9% of their operable capacity, down from 94.6% the previous week. Data shows U.S. crude oil imports averaged 8.2 million bpd during the week-ended Jan. 18, 664,000 bpd higher than the week prior. Over the last four weeks crude oil imports averaged about 7.7 million bpd, 2.1% less than the same four weeks in 2018.

Wire services report that the United States is preparing to invoke sanctions on Venezuela's oil industry, including a full embargo on U.S. imports of Venezuela's crude in response to a brutal government crackdown of the demonstrations in Caracas on Wednesday. If a government standoff with opposition leaders escalates in further violence, U.S. refineries could be forced to stop purchases of crude from the battered South American country, which is currently the third largest exporter of crude to the United States.

According to EIA data, U.S. imports of Venezuelan crude averaged about 574,000 bpd in December, down roughly 40% from July 2016. Refiners Chevron, PBF Energy and Citgo are the largest recipients of Venezuelan crude.

Heavy grade crude is prized by Gulf Coast refineries, due to their plant configurations. Declining crude production in Mexico, and a lack of pipeline capacity from Canada have sharply tightened the market for heavy crude.

In other news, China is sending high level ministers to the United States early next week, with Vice Premier Liu He previously scheduled to meet U.S. representatives in Washington, D.C., Jan. 30-31. While uncertainty remains high, Kevin Hassett, chairman of the White House Council of Economic Advisors, this week said a trade deal with China could be reached by March 1, the final day of a 90-day truce to their trade dispute.

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