DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange softened in late-morning trade Wednesday, with the RBOB and ULSD contracts retreating 1.5% in reaction to U.S. Energy Information Administration data showing total crude and petroleum products supplies spiked more than 10 million barrels (bbl) last week as domestic producers raised output to the highest level since April 2020 and gasoline and distillate imports surged.

U.S. commercial crude oil inventories increased for an eighth consecutive week through Feb. 3, building by a massive 34.4 million bbl since the start of the year. Last week, stocks increased by another 2.4 million bbl, lifting inventories to 4% above the five-year average at 455.1 million bbl. Analysts mostly expected inventories to have increased by a smaller 1.8 million bbl in the reviewed week. A larger-than-expected build occurred even as exports softened to 2.940 million barrels per day (bpd), down 592,000 bpd from the previous week, and producers boosted output to 12.3 million bpd -- the highest output rate since the coronavirus pandemic erased a chunk of domestic oil production. That more than offset a larger-than-expected increase in refinery crude throughput to 15.4 million bpd. On the week, refiners raised run rates by 2.2% to 87.9% of capacity compared with expectation for a 0.5% bump.

Oil stored at Cushing, Oklahoma, hub -- the delivery point for West Texas Intermediate -- jumped 1.1 bbl from the previous week to 39.1 million bbl.

In the gasoline complex, commercial stockpiles built by 5 million bbl in the reviewed week to 239.6 million bbl compared with expectations of a 1.4 bbl increase. Demand for motor fuel remained anemic at 8.428 million bpd, up by a modest 70,000 bpd.

Distillate demand, however, increased by 70,000 bpd to 3.762 million bpd. Domestic distillate stocks increased by 2.9 million bbl to 120.5 million bbl.

Total products supplied over the last four-week period averaged 20.1 million bpd, down 8.2% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.3 million bpd, down 2.8% from the same period last year. Distillate fuel product supplied averaged 3.8 million bpd during the four weeks ended Feb. 3,

Down 16% from the same period last year. Jet fuel product supplied was up 6.6% compared with the same four-week period last year.

Near 11:30 a.m. EST, WTI for March delivery pared earlier gains to trade near $77.38 bbl, up $0.26, the NYMEX RBOB March contract declined $0.0422 to $2.4148 gallon, and front-month ULSD futures fell $0.0302 to $2.8770 gallon.

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