Oil Futures Rally on EIA Data

WASHINGTON (DTN) -- New York Mercantile Exchange spot-month oil futures rallied late morning Wednesday on bullish data from the Energy Information Administration. However, West Texas Intermediate trimmed gains after government data showed domestic crude production climbed to a record-high 12.5 million barrels per day (bpd), subduing enthusiasm from a larger-than-expected draw from U.S. commercial crude inventories.

At 11:45 a.m. EDT, NYMEX October WTI futures were up $0.95 near $55.90 per barrels (bbl), and the Intercontinental Exchange October Brent contract traded up $1.10 at $60.61 bbl. NYMEX September ULSD futures gained 2.35 cents to $1.8159 gallon and the September RBOB contract advanced 3.34 cents to $1.6499 gallon.

EIA reported midmorning a second consecutive weekly draw from U.S. commercial crude inventories during the week ended Aug. 23, while also detailing larger-than-expected draws in both gasoline and distillate stockpiles. According to government data, U.S. commercial crude inventories fell 10 million bbl last week, exceeding market expectations of 4.7 million draw, but slightly smaller than the 11.1-million-bbl drop reported by the American Petroleum Institute on Tuesday. At 427.8 million bbl, U.S. crude inventories narrowed a surplus against the five-year-average to 1.5%, although stocks are 5.8% above the corresponding week a year ago.

The third-largest crude draw this summer is partly attributed to a massive 1.29-million-bpd drop in crude imports during profiled week, while exports continued higher for the second consecutive week. EIA also showed U.S. crude refinery inputs decreased 295,000 bpd from the previous week to average 17.4 million bpd, with refineries operating at a lower 95.2% run rate.

Following three weeks of anemic output, U.S. crude production reversed 200,000 bpd higher to 12.5 million bpd, an all-time record high. For the four-week average, domestic crude production was at 12.350 bpd, up 13% from the corresponding four weeks a year ago.

EIA data was also bullish for refined products, detailing much larger-than-expected draws in both gasoline and distillate stocks during the week ended Aug. 23. The agency said total motor gasoline inventories tumbled 2.1 million bbl to 232 million bbl last week, narrowing a surplus against five-year average to about 3%. Gasoline production surged 763,000 bpd on the week to 10.66 million bpd, while implied demand reversed 274,000 bpd higher to 9.9 million bpd from the prior week.

Distillate fuel inventories dropped an unexpected 2.1 million bbl to 136.1 million bbl, pressing stocks 4% below the five-year average for this time of year. Distillate fuel production fell 147,000 bpd to 5.193 million bpd on higher demand, up 290,000 bpd to 4.048 million bpd as of Aug. 23. Total commercial petroleum inventories tumbled 11.2 million bbl last week, according to the government data.

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

(BAS)