Oil Futures Rally on Higher Refinery Runs, Gasoline Demand

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- In post-inventory trade Wednesday, oil futures nearest delivery on the New York Mercantile Exchange pushed higher after federal data showed U.S. gasoline stockpiles increased below consensus during the week ended March 19 and commercial crude oil supplies unexpectedly rose, even as refiners ramped up run rates and demand for motor fuel reversed higher, which coincides with business re-openings in large gasoline-consuming states.

Near noon in New York, NYMEX West Texas Intermediate for May delivery surged $2.74 to trade above $60 barrel (bbl) at $60.49 bbl and the Intercontinental Exchange benchmark May Brent contact advanced a like amount to trade near $63.51 bbl. NYMEX ULSD April futures spiked over 5 cents to trade near $1.8049 gallon and front-month RBOB contract rallied 7.21 cents to $1.9695 gallon.

Gasoline supplied to the U.S. market, a measure for demand, increased 174,000 barrels per day (bpd) to a two-week high 8.616 million bpd during the week ended March 19, closing the gulf with the year ago demand rate by more than 1 million bpd or 10% to a modest 221,000 bpd or 2.5%. Gasoline stockpiles increased 204,016 million bbl from the previous week to 232.3 million bbl compared with analyst expectations for a 700,000 bbl build.

Distillate stocks, meanwhile, rose a larger-than-expected 3.8 million bbl to 141.6 million bbl and are now 1% above the five-year average, said the Energy Information Administration. Earlier in the week, analysts had estimated distillate supplies would rise by a smaller 200,000 bbl from the previous week.

Refiners hiked the national run rate by 5.5% from the previous week to 81.6% as plant activity continued to recover after last month's severe weather disruptions in Texas and Oklahoma. Analysts estimated a smaller 3.4% increase in utilization from the previous week.

On the bearish side, U.S. commercial crude oil inventories increased for a fifth consecutive week through March 19 to 502.7 million bbl, expanding the surplus against the five-year average to about 6% on the week. Contrary to market expectations for a modest decline, crude oil stockpiles rose 1.9 million bbl last week after gaining 2.4 million bbl in the previous week. Oil stored at the Cushing tank farm in Oklahoma, the delivery point for the WTI contract, fell 1.9 million bbl from the previous week to 46.3 million bbl.

U.S. crude oil production also rose by 100,000 bpd from the previous week to 11 million bpd, according to the EIA.

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

Liubov Georges