Oil Deepens Losses Despite Large Drop in US Crude Supplies

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures accelerated losses in late morning trade Wednesday, sending front-month West Texas Intermediate as much as 5% lower despite U.S. Energy Information Administration data showing nationwide commercial crude and petroleum product inventories decreased by a larger-than-expected margin last week as refiners boosted run rates to meet still strengthening demand for diesel and gasoline.

In late morning action, April WTI futures traded near $116.70 barrel (bbl), down $7 on the session, and international benchmark Brent crude declined $8.25 to near $115.35 bbl. NYMEX April RBOB futures dropped 17.75 cents to near $3.5075 gallon, with front-month ULSD futures plunging 58.75 cents to near $3.8505 gallon.

EIA data showed U.S. commercial crude stockpiles fell by 1.9 million bbl from the previous week to 411.6 million bbl and are now about 13% below the five-year average. Analysts had estimated crude stockpiles had decreased by a smaller 400,000 bbl from the prior week. Oil stored at the Cushing, Oklahoma, hub -- the NYMEX delivery point for WTI futures -- fell by 585,000 bbl from the previous week to 22.2 million bbl, according to EIA.

U.S. crude oil production was unchanged from the previous week at 11.6 million barrels per day (bpd).

The large crude draw came as domestic refiners hiked run rates by 1.6% last week to 89.3%, processing 15.4 million bpd.

In the gasoline complex, commercial inventories fell by 1.4 million bbl to 244.6 million bbl compared with analyst expectations for inventories to have decreased by 1.9 million bbl from the previous week. Demand for motor gasoline spiked 219,000 bpd to 8.962 million bpd -- the second highest weekly rate since the start of the year.

Distillate stocks fell by 5.2 million bbl to 113.9 million bbl, and are now about 18% below the five-year average, EIA said. Analysts expected distillates inventories had declined by 1.9 million bbl from the previous week. Demand for distillate fuels jumped 137,000 bpd from the prior week to 4.587 million bpd -- the highest weekly demand rate since late January.

Total products supplied over the last four-week period averaged 21.6 million bpd, up 12.3% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.7 million bpd, up by 7.5% from the same period last year. Distillate fuel product supplied averaged 4.4 million bpd over the past four weeks, up 5.6% from the same period last year. Jet fuel product supplied was up 35.4% compared with the same four-week period last year.

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

Liubov Georges