U.S. crude stocks drop, diesel inventories surge
U.S. crude oil stockpiles unexpectedly fell last week, but diesel inventories surged as fuel demand remains impaired due to the coronavirus pandemic, the Energy Information Administration said.
Most U.S. states have eased restrictions on movements to halt the spread of COVID-19, but activity is picking up slowly. Crude stockpiles have dropped, but consumption is not keeping up with refining production, boosting inventories.
Crude inventories dropped 2.1 million barrels for the week to May 29 to 532.3 million barrels, compared with analysts’ expectations in a Reuters poll for a 3 million-barrel rise.
Distillate stockpiles, which include diesel and heating oil, rose by 9.9 million barrels to 174.3 million barrels, versus expectations for a 2.7 million-barrel build. Overall demand for diesel and similar fuels is down 13% from the year-ago period over the last four weeks.
“That headline number is really substantial for diesel and has to be a concern,” said Tony Headrick, energy markets analyst at CHS Hedging. “That increase in products particularly diesel fuel, is so far weighing on the market.”
U.S. crude futures were little changed after the data release, rising 1 cent to $36.82 a barrel as of 10:57 a.m. EDT (1457 GMT). Heating oil futures, which reflects distillate markets, were down 2.6% on the news.
U.S. gasoline stocks rose by 2.8 million barrels, exceeding a forecasted 1 million-barrel build. Gasoline product supplied, a proxy for demand, picked up last week, but the four-week average still shows a 23% drop from the year-ago period.
Imports edged off the previous week’s surge built on arrivals of large tankers of crude from Saudi Arabia, but overall imports were still higher than most recent weeks. Net U.S. crude imports fell last week by 639,000 barrels per day to 6.2 million bpd.
Refinery utilization rates increased 0.5 percentage points, the EIA said. (Reporting By Jessica Resnick-Ault and Laura Sanicola Editing by Marguerita Choy)
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