DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange weakened in late-morning trade Wednesday, with the U.S. crude benchmark accelerating losses following the midmorning inventory report from the U.S. Energy Information Administration. The report showed commercial crude oil stockpiles unexpectedly fell during the final week of January, even as refiners sharply reduced run rates amid softer demand for motor gasoline while domestic production extended lower for the second consecutive week

Near 11:30 a.m. EST, front-month West Texas Intermediate futures dropped $0.80 barrel (bbl) to $87.29 bbl. NYMEX March RBOB futures held a 0.40 cent gain at $2.5797 gallon, with the front-month ULSD futures turned lower to trade near $2.7362 gallon, down 0.57 cent.

U.S. commercial crude oil inventories unexpectedly decreased by 1 million bbl from the previous week to 415.1 million bbl and are now about 9% below the five-year average. Analysts expected crude stockpiles would rise by 1.1 million bbl from the prior week. Oil stored at the Cushing, Oklahoma, hub, the delivery point for the WTI contract, fell 1.2 million bbl from the previous week to 30.5 million bbl, the EIA said in its weekly report. U.S. crude oil production, meanwhile, fell by 100,000 barrels per day (bpd) from the previous week to the lowest weekly rate since mid-November at 11.5 million bpd. Refiner run rate dropped 1% to 86.7% compared with analyst expectations for a 0.1% decrease.

For the gasoline complex, EIA's inventory report was bearish, showing stockpiles having increased 2.1 million bbl from the previous week to 250 million bbl, more than analyst expectations for inventories to have increased by 1.7 million bbl. Demand for motor gasoline reversed lower by 279,000 bpd to 8.226 million bpd, down 539,000 bpd or 6.2% against the five-year average.

Demand for middle distillates remained resilient in the final week of January, holding near 4.669 million bpd -- 515,000 bpd or 12.4% above the five-year average. Distillate stocks were drawn down for the third straight week, down 2.4 million bbl to 122.7 million bbl, and are now about 19% below the five-year average. Analysts estimated distillates inventories would fall by 1.6 million bbl from the previous week.

Total products supplied over the last four-week period averaged 21.6 million bpd, up 11.8% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.2 million bpd, up 5.2% from the same period last year. Distillate fuel product supplied averaged 4.4 million bpd over the past four weeks, up 11.3% from the same period last year. Jet fuel product supplied was up 29% compared with the same four-week period last year at 1.466 million bpd.

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