US crude stocks up 5 million barrels
US crude stocks rose to a record high last week following a surge of imports and increased domestic production that more than offset a boost in refinery runs, according to the Energy Information Administration.
Crude inventories in the United States have been building since the beginning of the year. That increase has undermined the OPEC-led supply cut deal that had been undertaken to reduce the persistent global oil glut.
As of March 17, US crude stocks rose to 533.1 million barrels, up by 5 million barrels, nearly double analysts’ expectations of 2.8 million barrels, according to the EIA.
Crude imports to the United States increased to 1.1 million b/d.
The EIA says crude stockpiles at the Cushing, Oklahoma, the delivery hub for US crude futures rose 1.4 million barrels.
Following the release of the report, oil prices took a tumble. US West Texas crude futures extended losses to trade as low as $47.01/barrel and by 10:59 a.m. EDT, was trading at $47.48.
Brent dropped below $50/barrel for the first time since Nov. 30, but rose to $50.29 in later trading.
“The market remains nervous about rising U.S. production, which is also reducing the effectiveness of output cuts by the OPEC and some non-OPEC countries,” Abhishek Kumar, Senior energy analyst at Interfax Energy told Reuters.
US production rose to 9.13 million b/d on the week, and has been steadily rising to levels higher than a year ago.
EIA data also showed an increase in crude processing as refiners finished up seasonal maintenance and began gearing up for the US summer driving season.
Refinery crude runs rose 329,000 b/d as utilization rates were up 2.3 percentage points to 87.4 per cent of capacity.
“This is evidence that refinery maintenance is wrapping up for this season,” David Thompson, executive vice-president at Powerhouse, an energy commodities broker in Washington said in an interview with Reuters. “Expect to see increases on balance over the next six to eight weeks.”
Gasoline stocks fell 2.8 million barrels, more than analysts’ expectations of a 2.0 million barrel drop.
Distillate stockpiles, including diesel and heating oil, fell by 1.9 million barrels, more than the expected 1.4 million barrel drop, according to the EIA.
