US crude stocks down by 6.4 million barrels
US crude stocks took a significant tumble last week thanks to record high levels of refining and exports, according to the US Energy Information Administration. The agency also reported gasoline inventories also fell sharply ahead of the Memorial Day long weekend.
Crude stocks fell by 6.4 million barrels in the week ending May 26, much more than analysts’ expectations of a drop of 2.5 million barrels.
For the past eight weeks, US crude stocks have fallen, which may be evidence that the OPEC supply cuts are having an impact on the global glut of crude.
“This was a bullish report. It’s what the market needs to get a little more excited about prices. I don’t think this is going to be the end of it, I see the draws increasing from here,” Scott Shelton, energy specialist at ICAP in Durham, North Carolina told Reuters.
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According to the EIA, much of the drop in stocks can be attributed to a sizeable jump in refining activity, which reached a record high and overall capacity utilization hit a high not seen in over a decade.
Refinery crude runs rose 229,000 barrels per day (b/d) to 17.5 million b/d, slightly higher than the last peak of 17.3 million b/d in the week to April 21. Utilization rates were up 1.5 per cent to 95 per cent of nationwide capacity.
Despite the spike in refining, gasoline stocks fell 2.9 million barrels, over double the analysts’ expectations for a 1.1 million barrel drop.
As well, crude exports hit record highs, landing at 1.3 million b/d, up by 700,000 b/d. Imports fell 987,000 b/d, according to the EIA.
US exports of petroleum products rose to 4.9 million b/d, and on average, exports have increased over 31 per cent year-over-year.
The increase in petroleum products exports has helped bring down high gasoline inventories and helped offset a somewhat weak domestic gasoline demand noted so far this year.
US gasoline demand over the past four weeks was 0.7 per cent lower year-on-year at 9.6 million b/d.
The EIA data helped boost the mood of investors and oil prices on Thursday.
Brent crude futures rose 1.1 per cent to $51.31/barrel and US crude future rose 68 cents to $49/barrel, as of 11:33 a.m. EDT.