DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures held higher post-inventory trade Wednesday after federal data from the Energy Information Administration showed U.S. commercial crude oil inventories declined by a larger-than-expected margin despite refineries cutting run rates for the third consecutive week through Dec. 16.

Further supporting the oil complex, demand for gasoline rebounded from a five-month low 8.255 million barrels per day (bpd) last week, indicating stronger driving demand ahead of the holiday travel season that officially begins on Friday, Dec. 23. In the reviewed week, gasoline supplied to the U.S. market, a measure of demand, grew 459,000 bpd to 8.714 million bpd. Gasoline stockpiles still built by 2.5 million barrels (bbl) to 226.1 million bpd compared with expectations for inventory to have increased by 1.3 million bbl. Distillate fuel inventories dipped by 242,000 bbl to 119.9 million bbl and are now 7% below the five-year average. Analysts had expected distillates inventories would stay unchanged from the previous week. Demand for middle-of-the-barrel fuel also recovered to above 4 million bpd, up 247,000 bpd from the previous week.

In the crude complex, commercial oil stockpiles fell by a massive 5.9 million bbl to 418.2 million bbl, and are now about 7% below the five-year average, the EIA report showed. Analysts had mostly expected crude stockpiles would fall by just 300,000 bbl in the reviewed week. The supersized draw was realized despite another relatively large 3.6-million-bbl transfer of crude oil last week from the Strategic Petroleum Reserve to the commercial side, extending a yearlong effort by the U.S. government to stabilize oil markets. Oil stored at Cushing, Oklahoma, hub, the delivery point for NYMEX West Texas Intermediate futures, increased 853,000 bbl from the previous week to 25.2 million bbl, the EIA said in its weekly report.

U.S. crude oil production remained unchanged from the previous week at 12.1 million bpd, according to the EIA.

The refining utilization rate, meanwhile, dropped 1.3% from the previous week to 90.9% of capacity in contrast to expectations with a 0.2% increase. That follows a decline in refinery run rates for each week so far this month. Refiners processed 16 million bpd of crude during the week-ended Dec. 16, 150,000 bpd less than the previous week's average.

Near 11:30 a.m. EST, February WTI futures were up $1.57 to $77.81 per bbl, with January ULSD futures gaining than 6 cents to $3.1262 per gallon. January RBOB futures advanced 2.42 cents to $2.2470 per gallon.

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