U.S. crude oil stockpiles fell less than expected last week according to a largely bearish report on Jan. 9 from the Energy Information Administration (EIA), which also showed that gasoline and distillate inventories rose more than expected.
Crude inventories fell by 1.7 million barrels in the week to Jan. 4, compared with analysts' expectations in a Reuters poll for a decrease of 2.8 million barrels.
Distillate stockpiles, which include diesel and heating oil, rose 10.6 million barrels, more than five times the expected 1.9 million-barrel increase, the EIA data showed.
Gasoline stocks rose 8.1 million barrels, the largest weekly rise since December 2016. Analysts had forecast a 3.4 million-barrel gain.
U.S. Gulf Coast gasoline inventories rose to 89.4 million barrels, hitting fresh record highs, EIA data showed.
"The report is bearish given the smaller-than-expected decline in crude oil inventories and the very large increase in refined product inventories," said John Kilduff, a partner at Again Capital Management in New York.
"Refiners continue to operate at a high level, but they appear to be playing to increasingly empty theatre, in that, demand and export levels continue to be lackluster, especially for gasoline."
Distillates may have seen lower demand due to warmer than normal temperatures.
“The milder temperatures have hurt distillate demand a little bit," said Phil Flynn, an analyst at Price Futures Group in Chicago.
Crude stocks at the Cushing, Okla., delivery hub for U.S. crude futures rose 330,000 barrels, EIA said.
Crude benchmarks and refined products futures pared gains after the EIA report. U.S. crude traded at $50.97 a barrel, up $1.19, by 9:52 a.m. CST (15:52 GMT) after earlier trading at a session high of $51.50.
Refinery crude runs fell by 194,000 barrels per day (bbl/d), EIA data showed. Refinery utilization rates fell by 1.1 percentage point to 96.1% of total capacity.
Net U.S. crude imports rose last week by 626,000 bbl/d while crude production was steady at 11.7 million bbl/d.
Crude oil production in the U.S. continued to grow to a record high of 12.1 million barrels per day, rising from the all-time high in the previous week.
The U.S. Energy Department said on Feb. 28 it is offering up to 6 MMbbl of sweet crude oil from the national emergency reserve in a sale mandated by previous laws to raise funds to modernize the facility.
Crude inventories in the Permian Basin fell to 15 million barrels (MMbbl) in the week to Feb. 19, the lowest since October and down from a record 22 MMbbl in November. That glut had doubled in size from 11 MMbbl in June, according to the Genscape data.