EIA: US crude, fuel stockpiles soar amid record high refining

(Reuters) -- US inventories of crude and refined oil rose sharply and more than expected last week, with stocks of distillates hitting six-year highs, as crude imports and refining hit record highs, government data showed on Wednesday.

Photo Courtesy of Reuters.
Photo Courtesy of Reuters.

Crude inventories rose 4.1 million barrels in the week to Jan. 6, the US Energy Information Administration said, higher than analyst expectations for a 1.2 million-barrel build.

"We have had a triumvirate of bearish builds from today's report. Counter-seasonal strength in refinery runs have boosted product inventories, while stronger imports have bolstered crude stocks," said Matt Smith, director of commodity research at energy data provider ClipperData in Louisvile, Kentucky.

The market's reaction was initially bearish, with a sharp fall across the energy complex, but the selloff was quickly reversed, in part because a record amount of crude was refined.

Refinery crude runs rose 418,000 bpd to 17.1 million bpd, the highest level since EIA records begin in 1982.

Refinery utilization rates rose 1.6 percentage points to 93.6% of nationwide capacity, with rates in the Gulf Coast region reaching 96.4%, the highest seasonal levels since the EIA began collecting the data in 2010.

However, crude production also rose notably, particularly in the lower 48 states. Overall production was 8.95 MMbpd last week, most since April of last year. That could undermine the Organization of the Petroleum Exporting Countries' deal to reduce a global glut.

Crude stocks at the Cushing, Oklahoma, delivery hub for US West Texas Intermediate (WTI) crude futures fell by 579,000 barrels, EIA said.

WTI was up 2.6%, or $1.31, to $52.13 a barrel by 11:28 a.m. US fuel prices also rose, with heating oil futures up 2.4% and gasoline over 3% higher.

Some of the increase in crude inventories can be attributed to seasonal activities, as companies bring inventories onshore after leaving them in floating storage to reduce a year-end tax burden.

US crude imports rose last week by 1.8 MMbpd to 8.3 MMbpd as imports into the Gulf Coast alone hit 4.1 MMbpd last week, the highest rate since November 2013.

As refinery rates hit their highest since September, stocks of distillates -- which include heating oil, diesel fuel, jet fuel and other products -- rose to 170 million barrels, levels not seen since October 2010.

Distillate stockpiles soared 8.4 million barrels, versus expectations for a 899,000-barrel increase, the EIA data showed.

Gasoline stocks rose 5 million barrels, compared with analysts' expectations in a Reuters poll for a 1.6 million-barrel gain.

Reporting by David Gaffen; Additional reporting by Jarrett Renshaw and Scott Disavino; Editing by Marguerita Choy

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