CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures rallied late morning Wednesday after the Energy Information Administration reported a massive 12.581 million bbl drawdown in commercial stocks of crude oil, the largest weekly change in 2022, while builds in product inventories dulled the market response.
At 11:35 AM ET, January West Texas Intermediate futures were up $2.50 at $80.69 bbl, paring an advance to a $81.38 bbl intraday high. December ULSD futures were a little more than 5cts higher near $3.3475 gallon ahead of expiration this afternoon, with the January contract narrowing the backwardation in the prompt spread by more than 3 cents to about 2 cents gallon. December RBOB futures rallied 8.3 cents to $2.4150 gallon, and the January contract gained to $2.3750 gallon, narrowing its discount by a modest 50 points.
EIA reported commercial crude inventory tumbled to a 419.084 million bbl five-month low, pressing stocks to 37 million bbl or 8.1% below the three-year average. The large drawdown was accompanied by a 1.4 million bbl withdrawal of crude oil from the Strategic Petroleum Reserve. There was little change in crude inventory at the Cushing storage hub in Oklahoma, where stocks edged a modest 415,000 bbl lower to a 24.315 million bbl four-month low.
The steep drawdown, likely partly influenced by ad valorem taxes on inventory held at year-end in Texas and Louisiana, occurred as the national refinery run rate spiked 1.3% to 95.2% of capacity, the highest utilization rate since August 2019. PADD 3 Gulf Coast refineries drove the big increase in runs, with utilization jumping 2.3% to 98.2% of capacity, a four-year high. Crude inputs at refineries increased 228,000 bpd or 1.4% to 16.638 million bpd, a five-month high.
A surge in U.S. crude exports, up 706,000 bpd to 4.948 million bpd -- the third-highest weekly export rate in 2022, lent further support to the steep draw in commercial crude stocks.
The surge in refinery production boosted gasoline and distillate fuel inventories during the week-ended Nov. 25, with gasoline stocks building by 2.8 million bbl to 213.8 million bbl, and distillate stocks up 3.5 million bbl to 109.1 million bbl. Despite those builds, total U.S. stocks not including the SPR were drawn down 8.8 million bbl to 1.211 billion bbl, a four-month low.
Gasoline supplied to the U.S. market was flat at 8.317 million bpd despite the Thanksgiving Day holiday, while down 559,000 bpd or 6.1% during the four weeks ending Nov. 25 at 8.599 million bpd. Gasoline exports were strong at a 1.138 million bpd 10-week high last week, while the gasoline import rate fell to a 2022 low at minus 603,000 bpd.
Implied distillate fuel demand declined for the fourth consecutive week through Nov. 25, down 190,000 bpd last week to a 3.656 million bpd 10-week low. During the most recent four-week period, distillate fuel demand averaged 3.881 million bpd, 426,000 bpd or 9.9% less than the corresponding four weeks in 2021.
Brian Milne can be reached at firstname.lastname@example.org