DTN Oil

WASHINGTON (DTN) -- Nearby delivery month crude and refined products futures on the New York Mercantile Exchange accelerated losses in mid-morning trade Wednesday after data from the Energy Information Administration detailed a larger-than-expected build in domestic crude oil inventories and a surprise increase in distillate supplies during the final week of October, while demand for middle of the barrel fuels reversed lower despite what should have been a seasonal uptick in the fourth quarter.

Further weighing on the oil complex, U.S. crude production rebounded 200,000 barrels per day (bpd) from the previous week to 11.5 million bpd, the highest since May 2020 when the coronavirus pandemic shut-in a large chunk of domestic production. Domestic crude oil inventories, meanwhile, spiked 3.3 million barrels (bbl) to 434.1 million bbl, compared with calls for crude stockpiles to rise 1.5 million bbl. Oil stored at the Cushing, Oklahoma hub, the delivery point for West Texas Intermediate, fell by 916,000 bbl, a marked slowdown from EIA's reported 3.9 million bbl drop the previous week, suggesting the pace of Cushing drawdowns has begun to ease. The larger-than-expected crude build was realized even as domestic refiners increased run rates for the second time in three weeks, up 1.2% to 86.3%. This is above expectations for a 0.6% increase.

Gasoline inventories, meanwhile, declined 1.5 million bbl from the previous week to 214.3 million bbl, slightly above calls for a 1.3 million drop. Demand for motor gasoline rose 181,000 barrels per day (bpd) to 9.504 million bpd. Distillate stocks unexpectedly surged 2.2 million bbl to 127.1 million bbl and are now about 5% below the five-year average. Analysts expected a 1.2 million bbl decline.

Demand for distillates weakened for a second week in a row through Oct. 29, falling by 183,000 bpd to 3.686 million bpd. DTN refined fuels data show diesel consumption slipped 1.6% in the reviewed week, while remaining 4.4% higher relative to the same week in 2019. Diesel demand is just few weeks away from its fourth quarter seasonal peak.

Total products supplied over the last four-week period averaged 20.4 million bpd, up by 7.9% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.4 million bpd, up by 11.6% from the same period last year. Distillate fuel product supplied averaged 3.9 million bpd over the past four weeks, virtually the same as the same period last year. Jet fuel product supplied was up 44.5% compared with the same four-week period last year.

Near 11:30 a.m. ET, NYMEX December WTI slumped $2.87 to trade at $81.09 bbl, and NYMEX December RBOB futures slid 9.54 cents to $2.3550 gallon, and the front-month ULSD contract accelerated losses to $2.4402 a gallon, down 6.79 cents on a session so far.

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