U.S. crude stocks fell by their most since June, driven by a surge in U.S. crude exports to more than 4 million barrels per day for the first time in history, the Energy Information Administration (EIA) said Jan. 3.
Crude inventories fell by 11.5 million barrels in the week ended Dec. 27 to 429.9 million barrels, compared with analyst expectations in a Reuters poll for a 3.3 million-barrel drop.
The sharp fall in stocks was in part due to increased refining output that boosted distillate and gasoline stocks, along with a notable drop in imports, and the rise in exports.
The United States has only been exporting oil since early 2016, after a four-decade ban on crude shipments worldwide was lifted in response to a surge in U.S. oil production.
In that time, construction of shipping terminals and pipelines has surged to deliver oil to the U.S. Gulf Coast for export. That has upended world supplies, sapping the market share of the OPEC, which has throttled back supply to keep oil prices from collapsing.
"The U.S. is operating its refining system at or near capacity and so any increases in production are going to go into the export market," said Andy Lipow, president of Lipow Oil Associates in Houston.
The nation's oil transport capacity rose last year as three major new pipelines opened from the Permian Basin to the Gulf Coast. Expansions of shipping terminals in the Corpus Christi, Texas, area, also lifted export capacity.
U.S. crude futures remained higher on the day following the U.S. killing of an Iranian military commander in Iraq, but pared gains from prior to the report due to the sharp increase in diesel and gasoline stocks. U.S. West Texas Intermediate crude was up 2.8%, or $1.71 per barrel, to $62.89 a barrel, while Brent crude gained $2.04 a barrel, or 3%, to $68.25 a barrel.
"The initial market reaction was higher on that headline crude number, but the product builds are providing that negative influence," said Tony Headrick, energy markets analyst at CHS Hedging. "We could probably view it as net bearish from the product builds perspective."
Net U.S. crude imports fell by 1.52 million barrels in the last week, the EIA said.
Refinery crude runs rose by 303,000 barrels in the last week, the EIA said. Refinery utilization rates rose by 1.2 percentage points in the week.
U.S. gasoline stocks rose by 3.2 million barrels to 242.5 million barrels, the EIA said, compared with analysts' expectations for a 1.8 million-barrel rise.
Distillate stockpiles, which include diesel and heating oil, rose by 8.8 million barrels in the week to 133.7 million barrels, vs. expectations for a 1.1 million-barrel rise, the EIA data showed.
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