Crude oil inventories fell 5.1 million barrels in the December 8 week to 443.0 million, 8.3 percent below the level a year ago. Product inventories were mixed, with gasoline up 5.7 million barrels to 226.5 million, 1.5 percent below last year's level, while distillates fell 1.4 million barrels to 128.1 million, widening the year-on-year drop to 17.9 percent. The EIA crude oil drawdown was significantly smaller than the 7.4 million barrel drop reported yesterday to subscribers by the American Petroleum Institute (API), a private industry group. But WTI prices, which had rallied following yesterday's more bullish API data, remained roughly unchanged at around $57.20 per barrel immediately following the release of today's EIA report.
Refinery operation slackened slightly to 93.4 percent of operable capacity, 0.4 percentage points below last week's level. Production of gasoline rose, however, averaging 10.1 million barrels per day, while the production of distillates did decline, averaging 5.2 million barrels per day.
Crude oil imports rose by 161,00 barrels per day to an average of 7.4 million barrels per day. The 4-week average dropped to 7.4 million barrels per day, 3.3 percent less than was imported during the same period a year ago.
The demand side slightly strengthened, with total product supplied averaging 19.8 million barrels per day over the last four weeks, up 2.1 percent from the same time last year. The daily average for gasoline supplied during the period remained unchanged from last week's reading at 9.1 million barrels, but the year-on-year gain increased by 1.1 percentage points to 1.6 percent. Distillates supplied increased to a daily average of 4.0 million barrels, widening the year-on-year increase by 1.7 percentage points to 2.3 percent.
The week's report continues to show a U.S. oil market that has moved from oversupply closer to balance, with inventories of both crude oil and products, particularly distillates, showing large year-on-year declines due mostly to smaller crude oil import volumes. But the slight pickup in demand seen in this week's report may be the forerunner of increased demand from a U.S. economy that is showing signs of heating up, which would help reduce inventory further. Countering this, however, are current prices at 2-year highs, which are above most U.S. breakeven rates and likely to stimulate new shale oil exploration and development activities, increasing domestic production and supply down the road.