Crude oil inventories continued to plummet in the August 25 week, falling 5.4 million barrels to 457.8 million, 7.6 percent below the level in the same week last year. Gasoline inventories remained unchanged from the prior week at 229.9 million barrels, 0.9 percent below the year ago level, while distillates rose 0.7 million barrels to 149.2 million, down 3.6 percent from a year ago. The decline in crude oil stocks was larger than most analysts expected but in line with Tuesday's report from the American Petroleum Institute, a private industry group, reportedly informing subscribers of a 5.78 million weekly drawdown. Already under heavy pressure since Friday from expectations that Texas refinery shutdowns due to Hurricane Harvey will decrease demand for crude oil, WTI crude oil futures fell further by about 30 cents to $45.85 per barrel immediately following the release of the EIA report.
Crude oil imports fell sharply by 885,000 barrels per day from the prior week to an average of 7.9 million barrels per day. This took the average over the last four weeks down to 8.1 million barrels per day, 4.6 percent below imports a year ago.
Refineries upped their operations by 1.1 percentage points to 96.6 percent of capacity, with gasoline production increasing to an average of 10.6 million barrels per day, but production of distillates fell, averaging 5.1 million barrels per day.
The demand side strengthened, with total product supplied over the last 4 weeks averaging 21.2 million barrels per day, up 3.4 percent from the same period last year. Gasoline supplied averaged 9.7 million barrels per day, finally crossing into the plus column with a 0.2 percent gain on the year. But distillate demand continued at a much stronger pace, with product supplied averaging 4.2 million barrels per day, up 11.1 percent from a year ago.
Increasing demand and falling inventories would normally pull crude oil prices higher, but domestic production increases in the long term and the inevitably declines in refinery capacity as result of Hurricane Harvey in the short term are likely to maintain the selling pressure currently dominating crude oil prices.