DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate and RBOB futures on the New York Mercantile Exchange were flipping between gains and losses in volatile trading late Wednesday morning despite bullish data from the Energy Information Administration, with prices initially spiking after EIA reported gasoline demand pushed higher for a second week through Aug. 12 and to its highest consumption rate since the lead up to the July 4th holiday weekend, while combined crude and gasoline inventories fell by more than 11.5 million barrels (bbl).

Midmorning inventory data showed commercial crude oil inventories decreased by 7.1 million bbl from the previous week to 425 million bbl and are now about 6% below the five-year average. The sizable drawdown was realized after inventories built by more than 9 million bbl since the final week of July. This occurred even as refiners scaled back run rates more-than-expected to 93.5% of capacity, processing an average of 16.4 million barrels per day (bpd) which was 158,000 bpd less from the previous week's average. U.S. crude oil production also fell by 100,000 bpd to 12.1 million bpd, according to the EIA.

Gasoline stockpiles dropped by 4.6 million bbl in the reviewed week to 215.7 million bbl compared with analyst expectations for inventories to have decreased by just 900,000 bbl. Larger-than-expected drawdown was realized as demand for the motor transportation fuel pushed higher for a second consecutive week to 9.348 million bpd, up 225,000 bpd from the first week of August. The late summer surge in gasoline demand might suggest Americans have once again taken to the road for a final summer vacation now that the prices at the pump have eased substantially from June's plus $5 gallon. The average price for gasoline sold at retail outlets fell a ninth straight week through Monday, Aug. 15, according to EIA data, falling below $4 gallon for the first time since the final week of February.

While the weekly demand rate jumped, and the four-week average consumption rate climbed above 9 million bpd for the first time since early June to 9.064 million bpd, demand over the four-week period is 4.2% below last year's four-week average of 9.466 million bpd.

Distillate stocks rose by 766,000 bbl to 112.3 million bbl and are now about 23% below the five-year average, EIA said. Analysts expected distillate inventories would rise by 1.3 million bbl from the previous week.

Shortly after the noon hour in New York, NYMEX West Texas Intermediate September futures were up $0.35, nearing $87 bbl, and Intercontinental Exchange October Brent crude edged higher to $92.55 bbl. NYMEX September RBOB futures slipped to $2.8895 gallon, and September ULSD futures advanced 6.75 cents to near $3.5475 gallon.

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