Crude oil inventories fell sharply by 7.2 million barrels in the July 21 week to 483.4 million, 1.4 percent below the level a year ago. Product inventories also declined, with gasoline down 1.0 million barrels to 230.2 million, 4.7 percent below last year's level, and distillates down 1.9 million barrels to 149.6 million, 3.3. percent less than last year at this time. The large drawdown in crude oil inventories was foreshadowed by a Tuesday afternoon report from the American Petroleum Institute, a private industry group, which showed an even larger drop in inventories of 10.23 million barrels. The smaller inventory decline reported by the EIA was nevertheless bigger than the roughly 3 million barrel decrease most analysts expected. WTI prices jumped up by about 70 cents to around $48.80 per barrel,the highest level since June 1, immediately following the release of EIA report.
Crude oil imports increased slightly to an average of 8.0 million barrels per day, up by 48,000 barrels per day from the prior week. Imports over the last four 4 weeks averaged 7.8 million barrels per day, 4.2 percent below the level in the same period last year.
Refineries operated at 94.3 percent of their operable capacity, up 0.3 percentage points from the prior week, with gasoline production increasing to an average of 10.4 million barrels per day, and distillate production rising to an average of 5.1 million barrels per day.
The pickup in product demand in recent week accelerated, with total product supplied over the last four weeks averaging about 21.2 million barrels per day, up by 4.6 percent from the same period last year. But motor gasoline supplied stagnated at 9.7 million barrels per day, down 0.3 percent from the same period last year. Supplied distillates, however, averaged 4.2 million barrels per day over the last four weeks, and are now up by a sharp 13.2 percent from the same period last year.
The sizeable drawdowns in both crude oil and products combined with strongly increasing demand and falling imports has at least temporarily muted oversupply concerns raised by rising shale oil domestic production and significantly improves the crude oil price outlook.