U.S. crude stockpiles rise less than expected, distillates jump sharply
U.S. crude oil stockpiles rose less than forecast and distillate inventories jumped but gasoline posted a drawdown for the second straight week, the Energy Information Administration said.
The rate of increases in crude inventories has slowed since a record build of 19 million barrels in early April as refining output has rebounded modestly due to a slight recovery in gasoline demand. However, builds are expected to continue as consumption remains under pressure due to coronavirus-induced lockdowns.
Crude inventories rose for the 15th straight week, rising by 4.6 million barrels in the week to May 1 to 532.2 million barrels. That exceeded analysts’ expectations in a Reuters poll for a 7.8 million-barrel rise.
In the U.S. Gulf Coast refining and export hub, crude inventories rose 2.3 million barrels to a record high of 282.7 million barrels.
Distillate stockpiles, however, which include diesel and heating oil, surged, rising by 9.5 million barrels in the week to 151.5 million barrels, more than triple expectations for a 2.9 million-barrel rise, the EIA data showed.
“That smallish crude oil build was certainly supportive but there are still problems facing the market,” said John Kilduff, a partner at Again Capital in New York. “That huge build in distillates shows that the impact from a lack of airline traffic and over-the-road truck traffic.”
Diesel demand has not dropped as much as gasoline consumption because of farming and trucking use, but it is still 20% lower than the same time a year ago, the EIA said. Refiners have been producing more diesel, even mixing jet fuel back into processing.
The market for physical grades of crude had slumped in recent weeks as storage filled, but that growth has also slowed.
Still, inventories at the Cushing, Oklahoma, delivery hub, rose for a ninth straight week, rising 2.1 million barrels last week to 65 million barrels, their highest in three years, the EIA said.
Oil prices fell after the report, with U.S. crude down 4.4% to $23.49 a barrel as of 10:48 a.m. ET (1448 GMT), while Brent was down 3.8% to $29.78 a barrel.
U.S. gasoline stocks fell by 3.2 million barrels in the week, the EIA said, compared with analysts’ expectations in a Reuters poll for a 43,000-barrel rise.
“Gasoline demand rose quite nicely last week and there’s some bright spots through this report,” said Tony Headrick, energy markets analyst at CHS Hedging.
Refinery crude runs rose by 215,000 barrels per day in the last week, EIA said. Refinery utilization rates rose by 0.9 percentage points on the week to 70.5% of capacity.
Weekly U.S. crude production dropped by 200,000 bpd to 11.9 million bpd, its lowest rate since July 2019, the EIA said.
Reporting By David Gaffen, Laura Sanicola and Laila Kearney; Editing by Marguerita Choy
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