U.S. crude oil stocks rose sharply last week, bringing overall supply to its highest level since December, and gasoline inventories also rose, the Energy Information Administration (EIA) said May 2.
Crude inventories jumped by 6.2 million barrels (bbl) to about 436 million bbl in the week to April 27, compared with expectations for an increase of 739,000 bbl. The build was largely concentrated on the West Coast, where inventories rose by nearly 5 million bbl.
“Sometimes the West Coast numbers are erratic and usually when you get a big build in the West Coast, it’s followed with a big draw the next week," said Phil Flynn, analyst at Price Futures Group in Chicago.
Gasoline stocks rose 1.2 million bbl, compared with analysts' expectations in a Reuters poll for a 587,000-bbl drop.
The oil market initially reacted negatively to the news, with prices dropping on the build in crude and gasoline. Crude later recovered, though gasoline prices were still lower.
U.S. crude oil futures were up 22 cents at $67.46/bbl as of 9:59 a.m. CDT (14:59 GMT), while Brent crude fell 14 cents to $72.98/bbl. U.S. gasoline futures fell 0.7% to $2.0724 a gallon.
Price Futures' Flynn said he anticipates strong demand going forth that will keep refinery output high, which remains bullish for oil prices.
Refinery crude runs fell by 60,000 barrels per day and refinery utilization rates rose by 0.3 percentage points to 91.1% of total capacity, EIA data showed.
"This implies that maybe we’ll start to ramp up that refinery utilization rate which had been sliding," said Bob Yawger, director of energy futures at Mizuho in New York.
The jump in crude and gasoline stocks was offset by a bigger-than-anticipated fall in inventories of diesel, jet fuel and other distillates. Distillate stockpiles slumped by 3.9 million bbl, vs. expectations for a 1.4 million-bbl drop, the EIA said.
Crude production continued to rise, hitting a new weekly record of 10.62 million bbl/d. Weekly figures are considered less reliable, and the industry relies more on monthly data; the EIA on Monday said production in February rose to a record 10.26 million bbl/d, which ranks it second in the world behind Russia.
Crude stocks at the Cushing, Okla., delivery hub rose by 416,000 bbl, the EIA said.
Net U.S. crude imports rose last week by 263,000 bbl/d.
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