DTN Oil

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange advanced more than 1.5% in early afternoon trade Thursday despite inventory data from the U.S. Energy Information Administration showing commercial crude and gasoline stockpiles increased by a combined 11.9 million bbl during the week-ended Oct. 7, a much larger-than-expected margin, partly due to another large transfer of crude oil from the nation's Strategic Petroleum Reserve to the commercial side joined by a drop-off in refinery runs.

U.S. commercial crude oil stockpiles jumped 9.9 million bbl from the previous week to 439.1 million bbl, and are now just 1% below the five-year average, according to the EIA report. Analysts anticipated crude stockpiles would rise by only 1 million bbl in the reviewed week. The larger-than-expected build was realized on the back of a 7.7 million bbl drawdown from the SPR.

Oil stored at the Cushing, Oklahoma hub, the delivery point for West Texas Intermediate, decreased 309,000 bbl from the previous week to 25.6 million bbl. U.S. crude oil production, meanwhile, fell by 100,000 bpd to 11.9 million bpd, according to EIA.

Domestic refiners sharply cut run rates by 1.4% from the previous week to 89.9% compared with expectations for just a 0.3% decline from the week prior.

In gasoline complex, commercial stockpiles rose 2 million bbl to 209.5 million bbl, contrary to expectations for inventories to have decreased 1.2 million bbl. Gasoline demand decreased 1.189 million bpd to 8.279 million bpd after reaching the highest weekly consumption rate this year in closing out the third quarter at 9.465 million bpd.

Distillate stocks dropped 4.9 million bbl to 106.1 million bbl, and are now about 23% below the five-year average, EIA said. Analysts had anticipated distillates inventories would fall by 1.7 million bbl from the previous week.

Demand for distillate fuels, which typically correlates with economic activity, in the United States, unexpectedly jumped 265,000 bpd from the previous week to 4.370 million bpd -- the highest weekly consumption rate since early July. U.S. distillate fuel consumption remained well below 2021 levels for the past 2-1/2 months however, averaging just 3.6 million bpd.

Total products supplied to the U.S. market over the last four-week period averaged 20 million bpd, down 3.8% from the same period last year. Over the past four weeks, motor gasoline supplied to the U.S. market averaged 8.7 million bpd, down 5.5% from the same period last year. Distillate fuel product supplied averaged 4 million bpd over the past four weeks, down 3.8% from the same period last year. Jet fuel product supplied was up 3.4% compared with the same four-week period last year.

In early afternoon trading, NYMEX WTI November futures were trading just below $89 bbl, up $1.60, November RBOB futures advanced nearly 7 cents to $2.6985 gallon, and front-month ULSD futures rallied nearly 10.5 cents to $4.0365 gallon.

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