WTI, RBOB Futures Gain on Large Crude, Gasoline Drawdowns

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- West Texas Intermediate and RBOB futures powered higher in late morning trade Wednesday in reaction to government data showing big declines in commercial crude and gasoline inventory last week, while the ULSD contract reversed losses as stocks remain tight despite a modest build amid a boosted production rate for middle distillates while exports slowed.

Details of the Energy Information Administration report showed commercial crude oil inventories declined 3.1 million barrels (bbl) from the previous week to 436.8 million bbl, far exceeding expectations for a 200,000 bbl draw. The larger-than-expected draw occurred as refiners boosted crude throughput 406,000 barrels per day (bpd) in the reviewed week to 15.842 million bpd, with the national run rate up 1.7%. Earlier in the week, analysts estimated refiners raised the utilization rate 0.5% last week.

Domestic oil production, meanwhile, declined 100,000 bpd last week to 11.9 million bpd.

The large decline in commercial inventories was also due to a smaller-than-usual weekly transfer of crude from the U.S. Strategic Petroleum Reserve to commercial operations, down 1.9 million bbl for the reviewed week to 399.8 million bbl.

In the gasoline complex, commercial stockpiles plunged for the third consecutive week through Oct. 28, down 1.3 million bbl to 206.6 million bbl, with stocks now 7% below the five-year average. Demand for the transportation fuel dropped last week by 270,000 bpd to 8.660 million bpd after reaching the highest weekly rate of the year of 9.465 million bpd at the start of the fourth quarter.

Distillate fuel consumption, meanwhile, increased 379,000 bpd to 4.257 million bpd. Distillate stocks increased 427,000 bbl to 106.8 million bbl, and are now about 23% below the five-year average, EIA said. Nationwide distillate inventories have been running consistently below the five-year average for the year, with strong exports and domestic demand drawing down stockpiles.

Distillate stock build was due, in part, to a large drop in product exports last week, falling from a record-high 6.297 million bpd to 5.537 million bpd, with distillate exports accounting for nearly 300,000 bpd of the decline.

Total products supplied over the last four-week period averaged 20.3 million bpd, down 0.5% from the same period last year. Over the past four weeks, motor gasoline supplied to the U.S. market averaged 8.6 million bpd, down 8.2% from the same period last year. Distillate fuel product supplied averaged 4.1 million bpd over the past four weeks, up 5.1% from the same period last year. Jet fuel product supplied was up 0.7% compared with the same four-week period in 2021.

In late-morning trading, NYMEX December WTI futures traded $1.75 higher at $90.10 bbl. December RBOB futures advanced 8.55 cents to $2.6680 gallon, while front-month ULSD futures gained nearly 3 cents to $3.6500 gallon.

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

Liubov Georges