Oil Futures Pare Gains on Large Crude Build, Refinery Rates

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Crude and refined products futures on the New York Mercantile Exchange pared earlier gains to trade mixed in late morning trade Thursday. This followed government data that reported U.S. commercial crude oil inventories increased more than expected during the week ended Oct. 8. In addition, refiners sharply scaled back run rates amid softer demand for both gasoline and distillate fuels and maintenance.

The U.S. Energy Information Administration reported late morning nationwide crude oil inventories increased for the third consecutive week through Oct. 8, building 6.1 million barrels (bbl) compared with expectations for stocks to have added 900,000 bbl.

At 427 million bbl, commercial crude oil inventories currently stand about 6% below the five-year average after a sustained destocking pattern from the end of July to mid-September.

Oil stored at Cushing, Oklahoma, the delivery point for West Texas Intermediate futures, fell 2 million bbl from the previous week to 33.6 million bbl.

A larger-than-expected crude build was realized as domestic refiners hit the brakes, reducing run rates by 2.9% from the previous week to 86.7% of capacity, suggesting refinery downtime amid seasonal maintenance programs. Analysts expected run rates to remain unchanged last week.

Domestic refiners processed 683,000 barrels per day (bpd) less crude last week at a rate of 15.061 million bpd.

Domestic production, meanwhile, rose again by another 100,000 bpd to 11.4 million bpd -- still about 100,000 bpd below the rate seen prior to Hurricane Ida's landfall on Aug. 29, EIA data shows.

In refined fuels, gasoline inventories posted a larger-than-expected drawdown of 2 million bbl versus calls for stocks to have declined by 600,000 bbl. At 223.1 million bbl, domestic gasoline inventories currently stand about 2% below the five-year average. Demand for motor gasoline fell last week to 9.186 million bpd, down 241,000 bpd from the previous week -- directionally in line with a 0.1% weekly decline reported by DTN Refined Fuels Demand data earlier this week.

Distillate inventories remained little changed from the previous week at 129.3 million bbl and are now about 11% below the five-year average. Analysts were expecting a 1.1 million bbl draw.

Distillate consumption, often seen as proxy for economic activity, reversed lower by 433,000 bpd in the reviewed week to 3.932 million bpd. According to DTN Refined Fuels Demand data, diesel demand decreased by a steeper 1% from the prior week, while still 5.2% stronger relative to the same week in 2019.

Total products supplied over the last four-week period averaged 20.7 million bpd, up 12.5% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.2 million bpd, up 6.9% from the same period last year. Distillate fuel product supplied averaged 4.2 million bpd over the past four weeks, up 6.6% from the same period last year. Jet fuel product supplied was up 53.5% compared with the same four-week period last year

Near 11:45 a.m. EDT, NYMEX November WTI futures traded slightly higher near $80.58 bbl after trading as much 1.5% higher earlier in the session, and NYMEX November RBOB futures declined 1.34 cents to $2.3927 gallon. The NYMEX November ULSD contract traded little changed near $2.5255 gallon.

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

Liubov Georges