WASHINGTON (DTN) -- New York Mercantile Exchange oil futures charged higher in post-inventory trade Wednesday, lifting nearby month West Texas Intermediate above $63 barrel (bbl) after government data showed domestic crude production slumped over 1 million barrels per day (bpd) during the week ended Feb. 19. Refiners dropped run rates by 2.6 million bpd to the lowest level since early May 2020, giving the first indications of the hit the industry sustained from last week's Winter Storm Uri.
Steep losses in U.S. refining output occurred in the Midwest PADD 2 and Gulf Coast PADD 3 regions, where the storm had the harshest effect, especially in Texas which was the hardest hit state with substantial power and water outages last week. Midwest refiners reduced run rates by 9.4% from the previous week to 76%, while refiners along the Gulf Coast saw an even steeper decrease of 23.4% to 62.8% of regional capacity, according to the Energy Information Administration.
Last week, domestic refiners processed a mere 12.23 million bpd of crude oil -- the lowest output rate since the week ended Sept. 19, 2008, when refinery inputs averaged 11.5 million bpd. Private estimates indicate refinery runs were down a steeper 4 million bpd on Feb. 17 and 18.
Domestic oil producers did not fare much better. The data showed a massive 1.1 million bpd drop in U.S. crude output during the week ended Feb. 19. At 9.7 million bpd, the production rate fell to the lowest rate since early 2018. While some production rebounded earlier this week, there are now concerns over permanent shut-ins of the smaller "stripper" wells due to the cost of repairing and restarting a marginal well.
Contrary to expectations however, commercial crude stocks rose 1.3 million bbl from the previous week to 463 million bbl, on par with the five-year average, the EIA said. Markets expected crude supplies to have fallen by 4.9 million bbl from the prior week. Oil stored at Cushing, Oklahoma, the physical delivery point for the WTI contract, rose 2.8 million bbl from the previous week to 47.8 million bbl. Gasoline stockpiles remained mostly flat near 257.1 million bbl compared with analyst expectations for inventories to have fallen 3 million bbl. Distillate stocks fell by 5 million bbl to 152.7 million bbl and are now 3% above the five-year average, the EIA said. Demand for both gasoline and distillate fuels took a big hit last week, down by a combined 1.722 million bpd on the week -- largely in line with expectations.
In midday trading, WTI futures for April delivery surged $1.50 to trade near $63.15 bbl and front-month Brent futures on ICE gained $1.65 to $67.05 bbl. NYMEX March ULSD futures were up 3.4 cents to $1.9020 gallon and the front-month RBOB contract advanced 3.35 cents to $1.8920 gallon.
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