14 September 2016, Washington, D.C. — U.S. crude oil stocks fell last week, confounding expectations that inventories would rise to make up for the previous week’s draw-down, which was the biggest in 15 years, data from the U.S. Energy Information Administration showed on Wednesday.
Crude inventories fell 559,000 barrels in the week ended Sept. 9, compared with expectations in a Reuters poll for an increase of 3.8 million barrels.
It comes one week after a drop of more than 14 million barrels that was attributed to the effects of Tropical Storm Hermine, which sat off the U.S. Gulf Coast for several days.
U.S. crude imports recovered last week, rising 1.1 million barrels per day after plummeting 1.7 million b/d the previous week to a record low. Gulf Coast crude stocks jumped 2.3 million barrels.
The price of oil was driven lower by the notable increase in imports and hike in stocks of distillate products, traders said.
“So the million-dollar question is really a 14.5 million barrel question…as in where did all those barrels go to? The market was expecting some sort of a ‘make up call’ after last week’s storm affected mega-draw,” said David Thompson, executive vice president at commodities-focused broker Powerhouse in Washington.
Crude futures, which had been drifting lower prior to the news, briefly surged before resuming their decline. U.S. crude fell nearly 2 percent to $44.07 a barrel, touching a one-week low. Brent crude lost 1.8 percent at $46.26 a barrel.
Some of the drawdown this past week was the result of a decline in inventories at the Cushing, Oklahoma, delivery hub for crude futures , where stocks fell 1.3 million barrels, EIA said.
Distillate stockpiles, which include diesel and heating oil, rose 4.6 million barrels, the biggest weekly increase since January, putting them at their highest level on a seasonal basis in six years.
The expectation was for an increase of 1.5 million barrels, according to Reuters polling.
U.S. ultra-low sulfur diesel (ULSD) futures fell 2.6 percent, leading the energy trading complex lower.
“The big rise in distillate inventories should weigh, as the category assumes the mantle of seasonal leadership,” said John Kilduff, a partner at New York energy hedge fund Again Capital.
“Next week’s report will be telling, whether last week’s lost barrels finally show up in the petroleum balance sheet.”
Gasoline stocks rose 567,000 barrels, compared with analysts’ expectations for a 343,000-barrel gain.
Refinery crude runs fell 200,000 b/d, as utilization rates fell 0.8 percentage point to 92.9 percent of capacity, EIA data showed.
*David Gaffen; Editing – Marguerita Choy – Reuters