NEW YORK U.S. crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, a government report showed on Wednesday.
Refinery utilization rose 1.4 percentage points to 81% of total capacity nationally in the week to Aug. 7, the Energy Information Administration said in a weekly report. On the East Coast, refinery utilization rates climbed to 71.8% of total capacity, the highest since August 2019, according to the data.
U.S. fuel demand rose to 19.37 million barrels per day last week, the highest since March, reducing gasoline and diesel inventories even as refineries produced more fuel.
“We’re seeing the demand bounce back,” said Phil Flynn, senior energy analyst at Price Futures Group. “The market is tightening a lot quicker than people thought.”
The market has recovered from the doldrums of April, when U.S. crude futures briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the COVID-19 pandemic.
Crude prices gained as much as 2% in the 30 minutes after the report was released. U.S. crude was last trading 61 cents, or 1.5%, higher at $42.22 a barrel by 12:28 p.m. EDT (1628 GMT), while Brent crude rose 67 cents, or 1.1% to $45.17.
Gasoline stockpiles fell 722,000 barrels, the EIA said, exceeding analysts’ estimates for a 647,000-barrel drop.?
Distillate stockpiles, which include diesel, jet fuel and heating oil, fell by 2.3 million barrels, compared with expectations for a 400,000-barrel increase, the EIA data showed.
“Distillate, which has been the weak sister because of jet demand, had a big drawdown. That all is playing into the idea that demand is getting a little bit better,” Flynn said.
Crude inventories fell 4.5 million, compared with analysts’ expectations in a Reuters poll for a 2.9 million-barrel drop.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.3 million barrels last week, EIA said. U.S. Gulf Coast crude stockpiles posted their biggest combined three-week drop on record, according to the report.
U.S. crude output dropped to 10.7 million bpd from 11 million bpd the previous week, according to the report.
“The most surprising statistic was the decline in oil production by 300,000 barrels per day at the same time that we’ve been hearing producers talking about restoring production,” said Andrew Lipow, president of Lipow Oil Associates in Houston. “That’s going to give more support to crude oil prices for the balance of the year.”
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