Investing.com -- U.S. oil stockpiles fell more than expected in the latest week, the Energy Information Administration said on Wednesday.
Crude inventories fell 6.64 million barrels last week, compared with analysts' expectations for a build of 985,000 barrels.
"Once again, the EIA has pulled the rug from under the feet of analysts by announcing a draw like seven times more than the crude build expected by the market," said Investing.com analyst Barani Krishnan. "But a closer examination of the numbers will tell you what’s going on and the narrative is quite clear: the current price of oil, especially with how spot contracts are trading in premium or backwardation to immediate nearby months, tells you that it just doesn’t make economic sense to store crude. So what do you do? Make gasoline, that’s what!"
Distillate stockpiles, which include diesel and heating oil, fell 1.73 million barrels in the week against expectations for a draw of 790,000 barrels, the EIA data showed.
Refinery crude runs were 152,000 barrels. The weekly refinery utilization rate was 0.7%, according to the EIA report.
Gasoline inventories rose 4.259 million barrels last week the EIA said, compared with expectations for a 1.81 million-barrel build.
Krishnan added: "Gasoline stockpiles keep piling week after week as the industry makes more and more fuel it doesn’t immediately have buyers for but hopes to find once the warmer months come around, people start driving and virus fears abate. Last week’s 83% U.S. refinery utilization rate was the highest since March, and that’s no accident.
On paper, the crude draws look staggering with 17.5 million barrels written off since the last build of 4.35 million for the week to Jan. 15. But for perspective, you have to look at the gasoline builds, which are at nearly 20 million since the last meaningful drawdown of just over 1 million barrels in the Christmas week. The gasoline drawdown also masks two other elements in the EIA data that should get more attention. First is the 800,000 barrels per day drop in U.S. crude exports, which have, until last week, been resilient with the sort of demand coming from China. Second is the tick-up in production to 11 million bpd after holding at 10.9 million for a while. This, however, is contingent on the EIA changing its math again next week as the U.S. industry isn’t really drilling away like before. On the distillates front, you had a nice drop of 1.7 million barrels last week but that corresponds with the pop in heating oil demand expected from the cold weather across the U.S. Northeast now."
|
