US crude inventories spike, gasoline stockpiles plunge: EIA

US crude inventories

The Energy Information Administration reported US crude inventories rose by 8.2 million barrels last week, four times what analysts had predicted.  iStock photo.

US crude inventories four times expectations

US crude inventories rose to a record high last week and gasoline stocks posted their largest one-week drop in nearly six years, according to the Energy Information Administration.

The EIA reported crude stockpiles rose by 8.2 million barrels in the week ending March 3.  Analysts had been expecting a build of 2 million barrels. The bulk of the increase was due to an unexpected large surge in stocks on the west coast.

The increase boosted total stockpiles, not counting the US strategic petroleum reserves to a record high of 528.4 million barrels.

Cushing Oklahoma, delivery hub for US crude futures, reported an increase in its crude stocks by 867,000 barrels.  Last week, US crude imports rose by 385,000 b/d.

Also this week, the EIA reported with a 6.6 million drop, gasoline posted its largest weekly inventory drawdown since April, 2011.  The decrease in inventory is chalked up to strong demand and reduced refining output on the US East Coast.

 

“Crude stocks were bolstered by rebounding imports, while both gasoline and distillates draws were exacerbated by higher implied demand,” Matt Smith, director of commodity research at ClipperData told Reuters.

Following the EIA report, US gasoline futures rose sharply, hitting a session high of $1.7072 a gallon before falling back to $1.6899, a 0.6 per cent gain on the day by 11:14 a.m.

US crude futures traded at 92 cents lower, falling to $52.22 per barrel after the bigger-than-expected build was reported.

The divergent prices for feedstock and product boosted the gasoline crack spread, an indicator of refining margins, to a one-week high at $18.91 a barrel.

Michael Korn, a broker at Sweet Futures in Princeton, New Jersey, told Reuters if crude inventories continue to rise, it could benefit crack spreads if gasoline stocks fall as demand rises.

That would help refiners working to recover from weak margins in 2016 due to oversupply, as the summer driving season approaches.

EIA data shows refinery crude runs fell by 172,000 b/d due to lower utilization rates, down 0.1 percentage point to 85.9 percent of total capacity.

Distillate stockpiles, which include diesel and heating oil, dropped by 2.7 million barrels, three times more than forecast.

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