U.S. crude oil stockpiles surprisingly fell last week, including at the Cushing, Okla., storage hub, the first time supply has dropped since the coronavirus pandemic choked off fuel demand in the United States.
Crude inventories fell 745,000 barrels in the week to May 8 to 531.5 million barrels, the U.S. Energy Information Administration (EIA) said, compared with expectations in a Reuters poll for a 4.1 million-barrel rise. That was the first decline after 15 weeks of builds.
U.S. crude stockpiles have risen by more than 100 million barrels since mid-January, with builds accelerating in March as the coronavirus pandemic took hold and during a brief price war between Saudi Arabia and Russia. The drawdown this week was in part because imports fell to a record low at less than 2 million bbl/d, and U.S. production dropped.
Stocks in Cushing fell by 3 million barrels in the last week, the EIA said. The hub, coming into this week's data, is more than 80% full, as producers find themselves with fewer places to store oil.
Crude oil production dropped 300,000 bbl/d to 11.6 million bbl/d, its lowest since December 2018.
Fuel demand rebounded in the most recent week, though over the past four weeks still remains 23% below the year-ago average.
"The pretty desperate picture we've seen because of the drop in demand, maybe we are seeing signs it's beginning to thaw," said Gene McGillian, vice president of market research at Tradition Energy.
"The market should take some heart from the numbers but we need to see more than one week of data."
Oil prices rallied briefly before returning to levels seen prior to the report. WTI crude futures in the U.S. were down 39 cents, or 1.5%, to $25.38/bbl while Brent dropped 2.1%, or 64 cents, to $29.34/bbl.
Net U.S. crude imports fell last week by 300,000 bbl/d in the last week, the EIA said, to 1.9 million bbl/d—the lowest ever.
Refinery crude runs fell by 593,000 bbl/d in the last week, EIA said. Refinery utilization rates fell by 2.6 percentage points in the week to 67.9% of total capacity, not far from an all-time low.
U.S. gasoline stocks fell by 3.5 million barrels to 252.9 million barrels, the EIA said, compared with forecasts for a 2.2 million-barrel drop. Gasoline inventories have declined in recent weeks due to reduced refining activity.
"While inventories of gasoline remain at or near the top of their five-year range, if this dynamic persists, I would expect the gasoline supply glut to diminish," said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.
Distillate stockpiles, which include diesel and heating oil, rose by 3.5 million barrels in the week to 155 million barrels, versus expectations for a 2.9 million-barrel rise, the EIA data showed.