Oil Softens on Smaller Crude Draw, Anemic Gasoline Demand

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange softened in post-inventory trade Wednesday after the U.S. Energy Information Administration reported total crude and petroleum product supplies decreased by a smaller-than-expected margin during the week ended July 21, as refiners scaled back run rates and demand for gasoline remained largely anemic despite being midway through the peak summer season.

Further details of the report revealed U.S. commercial crude oil inventories decreased by 600,000 barrels (bbl) last week compared to expectations for a 2.2-million-bbl drawdown. At 456.8 million bbl, commercial stockpiles remained about 1% above the five-year average. The smaller-than-expected decline in oil stockpiles came as refiners decreased crude throughput by 107,000 barrels per day (bpd) in the reviewed week to 16.5 million bpd, bringing the national run rate to 93.4% of capacity. Earlier in the week, analysts expected run rates would rise 0.1% during the week.

Oil stored at the Cushing, Oklahoma, hub, the delivery point for West Texas Intermediate, fell for the second consecutive week through July 21, down 2.6 million bbl to 35.7 million bbl, according to EIA data.

In the gasoline complex, commercial inventories also declined by a smaller-than-anticipated margin, down 786,000 bbl in the reviewed week to 217.6 million bpd, missing calls for a 1.7-million-bbl decrease. Demand for gasoline failed to improve for the second straight week, averaging 8.939 million bpd after an 8% drop at the start of the month.

Gasoline supplied to the U.S. market, a measure of demand, continued to trail the pre-pandemic level seen in 2019, averaging nearly 700,000 bpd or 7.3% below the comparable 2019 consumption rate during the first three weeks of July. On a four-week average basis through July 21, gasoline demand stood at 9 million bpd, up 2.6% against the comparable four weeks in 2022 while 5.2% below the same period in 2019.

For distillate fuels, commercial inventories declined by 245,000 bbl to 117.9 million bbl compared with expectations for stockpiles to fall by 600,000 bbl. Demand for middle of the barrel fuels, however, added only 49,000 bpd in the reviewed week to 3.718 million bpd, bringing the four-week average to 3.5 million bpd, down 6.8% against a year ago. Jet fuel supplied to the domestic market was up 0.5% compared with the same four-week period last year.

Total products supplied over the last four-week period averaged 20.5 million bpd, up 2.2% from the same period last year.

Near 11:30 a.m. EDT, NYMEX WTI futures for September delivery slipped $0.30 to trade at $79.33 bbl. NYMEX RBOB August futures advanced $0.0644 to $2.9177 gallon and ULSD August futures gained $0.0568 to $2.8368 gallon.

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

Liubov Georges