Crude oil inventories fell by 5.2 million barrels in the May 5 week to to 522.5 million, the fifth consecutive weekly drawdown which narrowed the gain on the year ago level by 0.3 percentage points to 2.8 percent. Product inventories also declined, with gasoline down 0.2 million barrels to 241.1 million, 0.2 percent above the year ago level, and distillates down 1.6 million barrels to 148.8 million, down 4.2 percent year-on-year.
The decline in crude stocks was mostly expected as analysts revised their previous forecasts for a drop of around 2.0 million barrels following Tuesday's release by the American Petroleum Institute (API) calling for a weekly drop in crude oil inventories of 5.8 million barrels. But the gasoline drawdown came as surprise, even as small as it was, since the API called for a 3.2 million barrel increase. The price of WTI crude oil futures, which had been under heavy selling pressure last week, jumped up about 50 cents to above $47 per barrel immediately following the release of the report.
Crude oil imports fell in the week, averaging 7.6 million barrels per day, down 0.644 million barrels per day from the week prior. The import drop put average imports over the last four weeks at about 8.2 million barrels, 5.0 percent above the year ago level.
Refineries operated at 91.5 percent of their operable capacity last week, down 1.8 percentage points from a week ago, but gasoline production increased to an average of 10.1 million barrels per day, while the production of distillates averaged 5.0 million barrels per day, slightly below last week's level.
Demand edged higher though remaining significantly weaker than a year ago, with total product supplied over the last 4 weeks averaging 19.7 million barrels per day, 1.6 per cent below the level in the same period last year. Motor gasoline supplied increased to an average of 9.2 million barrels per day, and is now down 2.4 percent from the same period last year. But distillate supplied fell to an average of 4.1 million barrels per day and is now down 0.7 percent from the year ago level, after being up as much as 15 percent earlier in the year.
This week's drop in inventories may have helped establish a bottom to crude oil prices following a $10 dollar plunge from April highs in recent weeks. And according to the EIA, the peak in crude oil inventories is behind us, with further declines likely ahead. In its short term energy outlook released on Tuesday, the EIA said it expects crude oil inventories to drop to 482 million barrels by December 2017. Nevertheless, continuing weakness in demand and anticipated increases in domestic production are likely to limit crude oil price advances above the $54 per barrel mark.