Crude oil inventories fell for the eighth week in row, dropping by a sharp 6.4 million barrels in the May 26 week to 509.9 million, 1.1 percent above the level a year ago. The weekly drawdown was larger than had been expected by analysts, though the American Petroleum Institute, an industry group, reported an even larger 8.67 million drawdown for the week Wednesday afternoon. Product inventories were mixed though down on balance, with gasoline falling 2.9 million barrels to 237.0 million, down 0.7 percent from the year ago level, while distillates rose 0.4 million barrels to 146.7 million, down 1.9 percent year-on-year. WTI prices fell about 25 cents to around $48.40 per barrel immediately following the EIA report.
Crude oil imports fell in the week, averaging 8.00 million barrels per day, down 309,000 barrels per day from the prior week. Imports over the last 4 weeks averaged 8.1 million barrels per day, still 6.6 percent above the same period last year but down from the 8.1 percent year-on-year gain seen in the prior week.
Refineries operated at 95.0 percent of their operable capacity last week and production increased, with gasoline rising to 10.4 million barrels per day and distillates to 5.2 million barrels per day.
Product demand increased, as total product supplied over the last 4 weeks averaged 20.4 million barrels per barrel, up 0.1 percent from the same period last year. Of this amount, motor gasoline supplied averaged 9.6 million barrels per day, down 0.7 percent from the year ago level, while distillates supplied averaged 4.2 million barrels per day, up 3.0 percent year-on-year.
The slightly improving demand side coupled with the large drawdown offers some relief from the pressure put on oil prices by increasing US domestic shale oil production and OPEC output cuts kept too slim to rebalance the supply/demand picture for oil.