U.S. crude oil stockpiles rose last week, ending a streak of inventory drawdowns, as refiners cut back crude processing due to Hurricane Laura, the Energy Information Administration said on Thursday.
Crude inventories rose by 2 million barrels in the week to Sept. 4 to 500.4 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.3 million-barrel drop.
Analysts expect additional builds in crude inventories because of weakened fuel demand due to the coronavirus pandemic and as gasoline use falls off in coming months.
Refiners cut back processing last week as Gulf Coast processing dipped on closures as a result of Hurricane Laura, but weakened margins and high distillate inventories could keep overall capacity use lower in coming months.
Prices rose, recovering some of the day’s losses, due to unexpectedly large drops in gasoline and diesel stocks. U.S. crude was down 27 cents to $37.76 a barrel as of 12:10 p.m. ET (1610 GMT) and Brent dropped 35 cents to $40.45 a barrel.
Refinery crude runs fell by 1.1 million barrels per day in the last week, EIA said. Refinery utilization rates fell by 4.9 percentage points in the week to 71.8% of total capacity. Gulf Coast capacity use fell to 63.9%, its lowest since Hurricane Harvey in 2017.
“The report was bearish, and it was also distorted by the aftermath of Hurricane Laura. Gasoline demand cratered, and jet fuel demand remains approximately 50% below last year levels,” said John Kilduff, partner at Again Capital.
Gasoline product supplied, a proxy for demand, dropped in the most recent week, and remains 10% below the average for this time of year.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.8 million barrels to their highest levels since May.
U.S. gasoline stocks fell by 3 million barrels in the week to 231.9 million barrels, EIA said, compared with expectations for a 2.4 million-barrel drop.?
Distillate stockpiles, which include diesel and heating oil, fell by 1.7 million barrels, versus expectations for a 557,000-barrel drop.
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