U.S. crude oil stockpiles rose sharply last week, driven by an increase in inventories and as refiners cut output, the Energy Information Administration (EIA) said on July 7.
Crude inventories rose by 8.2 million barrels in the week to July 1, compared with analysts’ expectations for a draw of 1 million barrels. Much of that inventory came from another release of barrels from U.S. strategic reserves, which fell by 5.8 million barrels.
U.S. commercial stocks are at 423.8 million barrels, or about 10% below the average for this time of year, the EIA said. Prices have been running at high levels for months as refiners attempt to meet consumer demand.
Refinery crude runs fell by 228,000 bbl/d. Refinery utilization rates dropped by 0.5 percentage point to 94.5%.
“We know refiners are going to have to continue to run at a high rate to keep up with demand. And so the expectation is that the crude supplies are not going to build as dramatically next week,” said Phil Flynn, analyst at Price Futures Group.
Gasoline stocks fell by 2.5 million barrels to 219.1 million barrels, compared with analysts’ expectations in a Reuters poll for a draw of 500,000 barrels.
Distillate stockpiles, which include diesel and heating oil, fell 1.3 million barrels, versus expectations for a build of 1.1 million barrels.
Product supplied, the best proxy for U.S. consumer demand, was up in the most recent week to 20.5 million bbl/d, though overall gasoline and distillate demand over the past four weeks was down a bit more than 5% from the year-ago period.
“There’s no sign of gasoline demand destruction in this report. So, still strong demand for high priced gasoline no matter how you cut it,” said Robert Yawger, director of energy futures at Mizuho in New York.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 69,000 barrels.
Net U.S. crude imports rose by 1.61 million bbl/d last week.
Oil prices rose on the news, rebounding from recent losses. Brent rose $5.43/bbl to $106.16 a barrel as of 11:36 a.m. EST (1536 GMT) while WTI crude in the U.S. gained $5.72 to $104.21/bbl.
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