Crude oil inventories fell 1.1 million barrels in the January 19 week to 411.6 million, widening the year-on-year decline by 0.7 percentage points to 15.7 percent and extending the uninterrupted string of weekly drawdowns to its tenth week. But product inventories increased, with gasoline up 3.1 million barrels to 244.0 million, 3.6 percent below the year ago level, while distillates rose 0.6 million barrels to 139.8 million, down 17.3 percent year-on-year. The drawdown in crude oil reported today by the EIA contrasted with a 4.755 million barrel build reported Tuesday by the American Petroleum Institute, a private industry group, and WTI prices jumped about 70 cents to fresh 3-year highs of around $65.20 per barrel following the release of the EIA report.
Refineries cut back operations by 2.1 percentage points to 90.9 percent of their operable capacity during the week. Production of gasoline fell to 9.4 million barrels per day and distillates to 4.8 million barrels per day.
Crude oil imports increased by 91,000 barrels per day to an average of 8.0 million barrels. Over the last four weeks, imports averaged 7.9 million barrels, 2.5 percent less than during the same period last year.
Demand continued to strengthen in year-on-year comparisons, with total products supplied over the last four weeks averaging 20.5 million barrels per day, up 8.1 percent from the same period last year. Motor gasoline supplied averaged 8.7 million barrels per day, 5.4 percent above the level a year ago, while distillate fuel averaged 4.0 million barrels per day, up 15.3 percent.
Growing demand coupled with smaller imports has brought inventories sharply down and disarmed for the time being the threat of oversupply caused by increased domestic production. But the sharply higher prices that also came as a consequence are likely to lead to intensified drilling and exploration and more pronounced growth in domestic production down the road.