Oil Deepens Losses as Inventory Spikes, Refiners Hit Brakes

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures extended losses in post-inventory trade Wednesday after government data from the U.S. Energy Information Administration showed crude and gasoline inventories spiked more than 19 million bbl during the second week of February as refiners unexpectedly slowed run rates.

U.S. commercial crude oil inventories increased for an eighth consecutive week through Feb. 10, building by a massive 50.7 million bbl since the start of the year. Last week, supplies increased by another 16.4 million bbl, lifting inventories to 8% above the five-year average at 471.4 million bbl. Analysts mostly expected inventories to have increased by a smaller 800,000 bbl in the reviewed week.

The larger-than-expected build occurred as domestic refiners reduced the utilization rate by 1.4% from the previous week to 86.5% of capacity. Refiners processed 15 million bpd in the reviewed period, 383,000 bpd less than the previous week's average. Meanwhile, domestic production remained unchanged at 12.3 million bpd, the highest output rate since the coronavirus pandemic prompted a steep decline in drilling activity and production.

Oil stored at Cushing, Oklahoma hub, the delivery point for West Texas Intermediate, climbed 659,000 bbl from the previous week to 39.7 million bbl.

In the gasoline complex, commercial stockpiles built by 2.3 million bbl to 241.9 million bbl compared with expectations for a 1.5 million bbl increase. Demand for transportation fuel fell by 154,000 bpd to 8.274 million bpd last week. In contrast, distillate demand increased by 132,000 bpd to 3.894 million bpd. Domestic distillate stocks decreased by 1.3 million bbl to 119.2 million bbl.

Total products supplied over the last four-week period averaged 19.8 million bpd, down 10.2% from the same period last year. Over the past four weeks, gasoline supplied to the U.S. market averaged 8.3 million bpd, down 3.2% from the same period last year.

Distillate fuel supplied averaged 3.8 million bpd over the past four weeks, down 15.6% from the same period last year. Jet fuel supplied was up 5.7% compared with the same four-week period last year to 1.494 million bpd.

Near 11:30 AM ET, WTI for March delivery declined $1.49 to $77.54 bbl, and NYMEX RBOB March contract fell $0.0543 to $2.4336 gallon, and front-month ULSD futures dropped $0.1078 to $2.8312 gallon.

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

Liubov Georges