DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange extended lower in late-morning trade Wednesday in reaction to inventory data from the Energy Information Administration showing commercial crude oil stocks increased for the first time in four weeks and domestic production rose sharply during the week ended Oct. 2, although draws in refined fuel supplies limited losses.

Late morning, November West Texas Intermediate futures were down $1.12 to near $39.55 per barrel (bbl), and November ULSD futures slumped 3.63 cents to $1.1524 per gallon, with the November RBOB contract trading more than 4 cents lower at $1.1952 per gallon.

EIA inventory report for the week ended Oct. 2 was overall bullish, detailing a sizable 1.4-million-bbl draw in gasoline stocks and a 962,000-bbl decline in distillate fuel inventories. Total commercial petroleum stockpiles declined 2 million bbl from the previous week to 1.419 billion bbl as product supplied to the U.S. market increased by 898,000 barrels per day (bpd) on the week.

U.S. commercial crude oil inventories increased for the first time in four weeks during the week-ended Oct. 2, up a modest 501,024 bbl to 492.9 million bbl, about 12% above the five-year average. Analysts mostly expected crude oil stocks to have been drawn down further below the previous week's five-month low.

The unexpected build could be partly explained by a sizable jump in domestic crude production during the week reviewed, up 300,000 bpd to 11 million bpd as producers continued to restore offshore facilities in the aftermath of hurricanes Laura and Sally. Output is likely to decline again in next week's report, with Hurricane Delta prompting production shut-ins in the Gulf of Mexico this week. The Bureau of Environmental Safety and Environmental Enforcement reported 540,495 bpd of crude production in the Gulf of Mexico was shut-in through Tuesday ahead of the hurricane.

U.S. crude oil refinery inputs averaged 13.9 million bpd during the week reviewed, up 184,000 bpd on the week, with the refinery run rate up 1.3% at 77.1%. Gasoline production increased last week to 9.5 million bpd and distillate fuel production averaged 4.5 million bpd.

Implied demand for gasoline jumped 367,000 bpd from the previous week to 8.896 million bpd, still down about 6% against year ago. Over the past four weeks, motor gasoline product supplied averaged 8.6 million bpd, down 6.7% from the same period last year.

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

(c) Copyright 2020 DTN, LLC. All rights reserved.