Oil Prices Rise on Surprise Inventory Draw
The combination of declining inventories, OPEC promise to extend cuts and a reduction of oil from Venezuela has buoyed prices. Oil surged on Wednesday and has pulled back slightly on Thursday following the EIA’s inventory report.
Inventories Declined More than Expected
According to the Energy Information Administration, US crude oil inventories declined by 3.9-million barrels in the latest week. This compares expectations of a build of 2 million barrels. The unexpected draw helped prices surge. Despite the surprise draw, crude oil inventories remain 2% above the 5-year average range for this time of year. Gasoline inventories decreased by 4.6 million barrels last week and are also above the 5-year average range by approximately 2% Distillate fuel inventories increased by 0.4 million barrels last week and are about 1% below the five year average for this time of year. The EIA reported that total petroleum inventories decreased last week by 10.2 million barrels.
Imports are slipping. The EIA reported that crude oil imports averaged 6.7 million barrels per day last week, down by 255,000 barrels per day from the previous week. Over the past month, crude oil imports averaged about 6.8 million barrels per day, 9.0% less than the same month last year. The drop in imports combined with steady demand is reducing inventory levels.
Demand Remain Robust
The Department of Energy reported that total product demand during last month averaged 20.9 million barrels per day, up by 2.2% from the same period last year. Gasoline demand dipped but distillate demand rose. The EIA revealed that gasoline demand averaged 9.0 million barrels per day, down by 2.2% from the same period last year. Distillate fuel demand averaged 4.1 million barrels per day over the past four weeks, up by 3.1% from the same period last year.
Crude oil refinery inputs averaged 16.0 million barrels per day during the week ending March 8, 2019, which was 30,000 barrels per day more than the previous week’s average. Refineries operated at 87.6% of their operable capacity last week.
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