DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures advanced more than 2% in late morning trade Wednesday after weekly inventory data from the U.S. Energy Information Administration confirmed a larger-than-expected draw occurred in domestic crude and refined fuels inventories during the week ended July 22, while demand for motor gasoline surged above 9.2 million barrels per day (bpd) to the second highest weekly consumption rate this year.

EIA's midmorning inventory report proved bullish for the oil complex, lifting front-month West Texas Intermediate above $97 barrel (bbl). The report revealed commercial crude oil inventories declined by a sizable 4.5 million bbl in the reviewed week, well above calls for a 700,000 bbl draw. This larger-than-expected drawdown was realized as U.S. crude exports surged 789,000 bpd or 21% to a 4.548 million bpd record high last week.

The sharp jump in exports reduced crude oil's net import rate by nearly 1.15 million bpd to 1.616 million bpd and offset a 292,000-bpd decline in refinery crude inputs to a 16.027 million bpd 10-week low, as domestic refiners scaled back runs 1.5% to 92.2% of capacity. The surge in exports also countered a 200,000-bpd increase in domestic oil production to 12.1 million bpd -- the highest weekly production rate since the beginning of the pandemic in March 2020.

Gasoline inventories also fell by a larger-than-expected margin, down 3.3 million bbl from the previous week to 225.1 million bbl, about 4% below the five-year average. Demand for motor gasoline jumped 724,000 bpd to 9.245 million bpd.

Distillate fuel inventories decreased 784,000 bbl last week to 111.7 million bbl and are about 23% below the five-year average. Demand for middle distillates edged up modestly to 3.750 million bpd.

Total products supplied over the last four-week period averaged 20 million bpd, down 2.9% from the same period last year. Over the past four weeks, motor gasoline product supplied to the U.S. market averaged 8.8 million bpd, down 7.1% from the same period last year.

Distillate fuel product supplied averaged 3.8 million bpd over the past four weeks, down 0.6% from the same period last year. Jet fuel product supplied was up 9.9% compared with the same four-week period last year.

Near 11:30 a.m. EDT, NYMEX September WTI futures advanced $2.28 to $97.34 bbl, and international benchmark September Brent crude on the Intercontinental Exchange gained $2.20 to $106.60 bbl. NYMEX August RBOB futures edged up 0.69 cent to $3.3619 gallon, and front-month ULSD futures rallied 10.08 cents to $3.6878 gallon.

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