Crude oil inventories rose for the first time in 11 weeks and were up 6.8 million barrels in the January 26 week to 418.4 million, narrowing the year-on-year decline by 0.3 percentage points to 15.4 percent. But product inventories declined, with gasoline down 2.0 million barrels to 242.1 million, 5.8 percent below the year ago level, while distillates fell 1.9 million barrels to 137.9 million, down 19.2 percent year-on-year. The EIA's crude oil inventory hike more than doubled the 3.23 million-barrel increase reported Tuesday by the American Petroleum Institute, a private industry group, and WTI prices dropped about 30 cents to around $63.95 per barrel immediately following the release of today's EIA report.
Following a 2.1 percentage-point cutback in the prior week, refineries cut back operations by another 2.8 percentage points to 88.1 percent of the operable capacity. Gasoline production nevertheless increased, averaging 9.6 million barrels per day, while the production of distillates fell, averaging 4.6 million barrels per day.
Crude oil imports rose by 380,000 barrels per day to an average of 8.4 million barrels per day during the week. But over the last 4 weeks, crude oil imports averaged 8.0 million barrels per day, 4.3 percent less than in the same period last year.
Demand continues to strengthen, with total products supplied over the last four weeks averaging 20.8 million barrels per day, up 7.6 percent from the same period last year. Motor gasoline supplied averaged about 8.8 million barrels per day during the period, up 7.1 percent from the level a year ago, while distillate fuel product supplied averaged 4.2 million barrels per day, 13.3 percent more than last year at this time.
Growing demand coupled with smaller imports has brought inventories sharply down and eliminated earlier oversupply caused by increased domestic production. But this together with a falling dollar has led to substantially higher prices, which in turn beckon North American oil companies to intensify exploration and development that may subsequently tilt the balance towards oversupply again.