U.S. oil stockpile reverses nine weeks of build-up

*Oil rig.

16 March 2017, New York — U.S. crude stocks fell last week as imports plummeted, dropping after nine consecutive increases, while gasoline and distillate inventories declined more than expected, the Energy Information Administration said on Wednesday.

The stockpiles have been closely watched by oil traders eager to determine whether a November agreement to cut output by the Organization of the Petroleum Exporting Countries is reducing a global supply glut.

Crude inventories fell by 237,000 barrels in the last week, compared with analysts’ expectations for an increase of 3.7 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.13 million barrels, EIA said.

U.S. crude oil imports fell by 565,000 barrels per day to 6.69 million b/d last week, the lowest level in a month, mostly due to large declines from OPEC member countries. That includes a drop of 426,000 b/d to 1.08 million b/d from Saudi Arabia, the largest weekly drop since September. Crude imports from Iraq fell by 527,000 b/d to 403,000 b/d, the largest weekly drop since August. Meanwhile, declines were also seen from Kuwait and Nigeria.

Brent futures rose 83 cents to $51.75 a barrel by 11:16 EDT (1516 GMT). Prices had hit a more than three-month low of $50.25 during the previous day’s trading.

U.S. West Texas Intermediate crude was up 82 cents, or 1.72 percent, at $48.54. On Tuesday, the price fell to $47.09, the lowest since late November.

“It was a supportive report, due to the large drawdown in refined product inventories,” said John Kilduff, a partner at Again Capital in New York. “The crude drawdown was small and was impacted by a drop in imports. The import levels continue to fluctuate in a wide-range week-to-week.”

Overall inventory levels remain quite high relative to the seasonal average, which remains a significant headwind for the market, he said.

Sharp drawdowns in gasoline and distillate were also supportive, as they may set up a potential for greater crude stockpile declines in April as refineries return from maintenance, said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.

Gasoline stocks fell by 3.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 2 million-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 4.2 million barrels, versus expectations for a 1.7 million-barrel drop, the EIA data showed.

Refinery crude runs fell by 20,000 barrels per day, EIA data showed. Refinery utilization rates fell by 0.8 percentage points.

“An unexpected drawdown in the U.S. crude oil stock was a result of reduced imports from Canada despite the marginal increase in domestic production,” said Kumar. “However, this unseasonal draw is not a trend and oil stock builds are expected to make a comeback.”

*Jessica Resnick-Ault; Editing: Phil Berlowitz – Reuters

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