DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange continued higher in late-morning trade Wednesday after inventory data from the Energy Information Administration revealed petroleum product inventories in the United States fell by a larger-than-expected margin during the week ended May 6 and domestic producers reduced output, offsetting a supersized build in commercial oil inventories.

U.S. commercial crude oil inventories spiked 8.5 million barrels (bbl) from the final week of April to 424.2 million bbl which is still 13% below the five-year average. Analysts estimated crude stockpiles would fall by 300,000 bbl. A surprise build came despite domestic refiners processing 230,000 barrels per day (bpd) more crude last week and domestic producers unexpectedly cut output by 100,000 bpd. At the current rate, U.S. production stands at 11.8 million bpd, still 1.1 million bpd below the pre-pandemic high set in February 2020.

The refining capacity utilization rate increased by 1.6% from the previous week to 90.0% compared with a consensus by analysts for a 0.5% increase.

Oil stored at the Cushing, Oklahoma, stock hub, the delivery point for West Texas Intermediate futures, decreased 587,000 bbl from the previous week to 28.2 million bbl, the EIA said in its report.

Higher refinery activity came even as demand for refined fuels softened in the first week of May, with gasoline demand in the United States sliding 154,000 bpd from the previous week to 8.702 million bpd and distillate demand decreasing 179,000 bpd to below 4 million bpd.

Distillate stocks fell in line with expectations, down 913,000 million bpd to 104 million bbl to near the lowest level in 14 years and some 21% below the five-year average. Gasoline inventories also dropped by a larger-than-expected 3.6 million bbl margin to 225 million bbl compared with analyst expectations for inventories to have decreased by 1.7 bbl.

Total products supplied over the last four-week period averaged 19.4 million bpd, up 1.6% from the same period last year. Over the past four weeks through May 6, motor gasoline product supplied averaged 8.8 million bpd, down by 1.4% from the same period last year. Distillate fuel product supplied averaged 3.8 million bpd over the past four weeks, down 5.5% from the same period last year.

Near 11:30 a.m. EDT, NYMEX WTI June futures rallied more than $5 to near $105 bbl, and the international crude benchmark Brent contract advanced $4.70 to more than $107 bbl. NYMEX June RBOB futures gained 11.05 cents to $3.6497 gallon, with front-month ULSD futures advancing about 8.75 cents to $4.0205 gallon.

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