Oil Futures Sustain Advance on Crude Draw, Run Rate Climbs

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange continued their advance in post-inventory trade early afternoon Wednesday although the RBOB contract pared gains, finding support from an unexpected drawdown in U.S. commercial crude oil stockpiles and higher refinery run rates during the week ended Nov.20, while a larger-than-expected build in gasoline supplies and weakness in implied demand heading into Thanksgiving holiday capped the upside.

Early afternoon in New York, NYMEX January West Texas Intermediate futures added 69 cents to trade at $45.60 barrel (bbl) and December ULSD futures surged 2.27 cents to $1.3822 gallon. NYMEX December RBOB futures gained more than 1 cent to trade near $1.2700 gallon.

Energy Information Administration data reported U.S. commercial crude oil inventories declined 753,984 bbl during the week ended Nov. 20 to 488.7 million bbl, about 6% above the 5-year average. The modest crude draw was not directionally in sync with earlier estimates of a 3.8 million bbl increase reported by the American Petroleum Institute. The draw was realized as refiners lifted crude inputs 422,000 barrels per day (bpd) from the previous week to 14.263 million bpd, running at 78.7% of operational capacity, up 1.3%.

Crude stockpiles at Cushing, the delivery point for U.S. stocks, fell by 1.7 million bbl to 59.9 million bbl with the hike in refinery runs, while domestic production rose by 100,000 bpd to 11 million bpd on the week.

Wednesday's data was once again bearish for the gasoline complex, showing a second consecutive increase in domestic gasoline inventories, with implied weekly demand eroding to the lowest level since mid-June at 8.129 million bpd. Gasoline supplied to the U.S. market, a measure for demand, fell more than 11% against last year's levels. Gasoline stockpiles rose by a larger-than-expected 2.2 million bbl from the previous week to 8.129 million bbl, some 5% above the 5-year average.

The data correlates closely with the sharp drop-off in traffic volumes across the United States detailed in high-frequency data, as coronavirus cases spiked to their highest level since the beginning of the pandemic.

Distillate stockpiles, however, continued lower for the tenth consecutive week through Nov. 25, down 1.4 million bbl to 142.6 million bbl last week, although still about 10% above the 5-year average. The drawdown was mostly in line with consensus for a 1.5 million bbl decline expected by the market. Total commercial petroleum inventories decreased by 1.1 million bbl last week. Total products supplied over the last 4-week period averaged 19.3 million bpd, down by 9.1% from the same period last year.

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

Liubov Georges