DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange held mostly higher post-inventory trade Thursday after federal data showed the widespread blast of sub-zero temperatures over the holidays disrupted refinery operations more than analysts had estimated, leading to a build in domestic crude stockpiles and sharp drop off in demand for refined fuels.

The U.S. Energy Information Administration late Thursday morning reported domestic refiners cut run rates by a massive 12.4% during the week ended Dec. 30 to 79.6% of capacity -- the lowest utilization rate since Winter Storm Uri in February 2021 shuttered much of the refining operations in Texas and Louisiana. Analysts mostly anticipated a smaller drop in the run rate in a range of 7.5% to 1.5%. On a weekly basis, refiners processed 2.3 million barrels per day (bpd) less crude oil compared to the previous week, with crude inputs averaging just 13.8 million bpd. Domestic oil producers, meanwhile, increased output by 100,000 bpd to 12.1 million bpd, EIA said.

The large falloff in refinery run rates combined with gains in domestic oil production led to 1.7 million barrels (bbl) build in commercial crude stockpiles compared with expectations for a 400,000 bbl build. At 420.6 million bbl on Dec. 30, commercial crude stockpiles stand about 4% below the five-year average. Oil stored at the Cushing tank farm in Oklahoma, the delivery point for West Texas Intermediate futures, also increased by 244,000 bbl from the previous week to 25.3 million bbl.

In the gasoline complex, commercial stockpiles fell by 346,000 bbl in the reviewed week to 222.7 million bbl compared with expectations of a 200,000 bbl increase. Demand for the transportation fuel fell by a massive 1.813 million bpd to 7.514 million bpd as cold weather kept drivers off the road during the holiday week.

Distillate demand also dropped, down 1.081 million bpd to 2.799 million bpd -- the lowest weekly consumption rate since April 2020 when the coronavirus pandemic shuttered large chunks of the economy. Domestic distillate stocks declined by 1.4 million bbl to 118.8 million bbl. Total products supplied to the U.S. market, a measure of overall domestic product demand, averaged 20.5 million bpd over the last four weeks, down 4.3% from the same period last year. Over the past four weeks, gasoline supplied to the U.S. market averaged 8.5 million bpd, down 7% from the same period last year. Distillate fuel product supplied averaged 3.6 million bpd over the past four weeks, down 12.4% from the same period last year.

Near 12:30 p.m. EST, WTI for February delivery advanced to $73.68 bbl, up $0.88, and the NYMEX RBOB February contract gained $0.0098 to $2.2791 gallon, and front-month ULSD futures declined $0.0381 to $2.9362 gallon.

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