US crude stocks decline biggest since September
The decline in US crude stocks last week was the largest in ten months and was more than analysts had expected due to falling imports and increased refining rates.
Data from the US Energy Information Administration showed US crude inventories fell by 7.6 million barrels in the week ending July 7. Analysts had anticipated a decline of 2.9 million barrels.
The fall in inventories was the largest since Sept. 4, 2016.
According to the EIA, the largest draw in the US was in the Gulf Coast region where crude stocks fell by 6.1 million barrels. Crude stocks at the Cushing, Oklahoma delivery hub for US crude futures dropped by 1.9 million barrels to 57.6 million barrels, the lowest since November, 2015.
Following the release of the EIA data, US crude briefly rallied to a session high of $46.48/barrel, but then fell back to $45.26 by 11:04 a.m. EST. Brent crude was up 5 cents per barrel to $47.57.
Despite the draw, analysts remain concerned about high US crude stocks. Fort this time of year, at 495.4 million barrels, inventories remain in the upper half of the average range.
“The country’s gasoline demand remains lacklustre and gasoline stocks are still above the five-year average, which will cap gains in crude and gasoline prices,” Abishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics told Reuters.
Gasoline inventories dropped 1.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel gain. The EIA reports gasoline demand is down 0.3 per cent from one year ago.
Refinery crude runs neared record highs set in May and were up by 103,000 barrels per day (b/d) to 17.2 million b/d as utilization rates rose 0.9 per cent to 94.5 per cent of total capacity.
Crude imports to the US fell by 282,000 b/d and exports increased to 918,000 b/d from 768,000 b/d.
EIA data showed distillate stocks, including diesel and heating oil were up by 3.1 million barrels against analysts expectations of a 1.1 million barrel decrease.
