DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate futures on the New York Mercantile Exchange advanced and products moved mixed in late morning trade Wednesday in reaction to government data from U.S. Energy Information Administration showing a large drop in commercial crude oil inventories accompanied with a sharp decline in domestic oil production even as refiners scaled back throughputs for the fourth consecutive week.

Near 11:45 a.m. EDT, NYMEX September WTI futures advanced $0.60 to above $72 barrel (bbl) at $72.21 bbl, and international crude benchmark Brent for September delivery gained $0.34 to $74.82 bbl. NYMEX August RBOB futures slipped 0.60 cents to trade near $2.3079 gallon, and NYMEX August ULSD contract gained 1.06 cents to $2.1545 gallon.

U.S. commercial crude oil inventories plummeted 4.1 million bbl from the previous week to 435.6 million bbl, and now stand 7% below the five-year average, said EIA on Wednesday morning. That compares with analyst estimates for a 2.2 million bbl draw. The larger-than-expected draw came as domestic production dropped 200,000 barrels per day (bpd) in the reviewed week to 11.2 million bpd, still about 2 million bpd below pre-pandemic levels.

Domestic refiners, meanwhile, reduced run rates for the fourth consecutive week to the lowest level since the week-ended May 28 at 91.1%. Earlier in the week, analysts were expecting refiners to have increased run rates by 0.3%. Refinery crude throughputs averaged 15.9 million bpd during the week-ended July 23 which was 132,000 bpd less than the previous week's average.

Gasoline inventories decreased by 2.3 million bbl last week to 234.2 million bpd, and now match the five-year average. Demand for motor fuel edged higher for the second consecutive week to 9.325 million bpd, bringing the four-week average to 9.5 million bpd, just slightly below 9.6 million bpd during the comparable four weeks in 2019.

Distillate inventories also fell by a larger-than-expected 3.1 million bbl last week to 137.9 million bbl and remain about 5% below the five-year average, the EIA said. Earlier in the week, analysts expected distillate supplies would decrease by a smaller 400,000 bbl. Distillate demand advanced for the second consecutive week, gaining 431,000 bpd to 4.356 million bpd. Total commercial petroleum inventories decreased by 6.5 million bbl last week. Total products supplied over the last four-week period averaged 21.1 million bpd, up by 10.6% from the same period last year.

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