US crude stocks dip, but gasoline inventories rise: EIA

US crude stocks down 1.7 million barrels

US crude stocks fell last week, according to the US Energy Information Administration.  The reduction in oil inventories was overshadowed by an unexpected increase in gasoline stocks which nixed market optimism over the crude drawdown.

Crude stocks were down by 1.7 million barrels in the week ending June 9.  Analysts had anticipated a higher drop of 2.7 million barrels due to a decrease in imports of 481,000 barrels per day (b/d).

The EIA reported refinery crude runs rose 29,000 b/d and utilization rates rose 0.3 per cent to 94.4 per cent of total capacity.

Gasoline stocks rose 2.1 million barrels where analysts were anticipating a drop in inventories of 457,000 barrels.

According to the EIA, gasoline inventories sit at 242. 2 million barrels, or 9 per cent above the five-year average of 223 million barrels.

US gasoline demand over the past four weeks is down by 1.2 per cent from one year ago.

“This is very unusual for this time of the year, when gasoline demand is supposed to pick up,” Carsten Fritsch, oil analyst at Commerzbank AG told Reuters.

As a rule, high inventories weigh on the futures’ market’s crack spreads, a measure of refining margins, throughout spring when refiners produce more gasoline for the upcoming driving season.  As summer nears and peak driving season begins, gasoline inventories usually start drawing down.

Following the EIA data release, the gasoline spread to crude dropped about 4 per cent to its lowest since May 4.

Reformulated blendstock gasoline futures slumped by 3.4 per cent to $1.449/gallon as of 10:59 a.m.  US crude futures were down 3.4 per cent to $44.92/barrel, the lowest intraday level since May 5.

“The build in gasoline stocks was a result of a further decline in gasoline demand, which marks a very subdued start into the summer driving season,” said Fritsch.

At the Cushing, Oklahoma oil delivery hub, crude stocks were down by 1.2 million barrels.

A report issued on Wednesday by the International Energy Agency said increasing US crude output will contribute to supply growth exceeding demand growth in 2018.

US crude production has grown steadily since the middle of last year.  Last week, crude output from the United States increased to 9.33 million b/d, up 12,000 from the previous week.