US Crude and Gasoline Inventories Decline on Higher Refinery Output

U.S. commercial crude oil and gasoline inventories both decreased last week as refinery activity ramped up, according to a weekly report from the U.S. Energy Information Administration (EIA).

Weekly Inventory Data

For the week ending July 10, the EIA reported the following key changes:

• Crude oil inventories fell by 1.7 million barrels to a total of 409.7 million barrels. This draw was smaller than the 2.6 million-barrel decline that analysts surveyed had anticipated.
• Gasoline stocks saw a larger-than-expected drop, falling by 1.5 million barrels to 210.5 million barrels. The consensus forecast was for a 760,000-barrel decline.
• Crude stocks at the Cushing, Oklahoma delivery hub, a key benchmark for U.S. crude futures, bucked the national trend, increasing by 430,000 barrels.

Refinery Activity and Demand

The inventory draws were supported by increased refinery operations. Refinery crude runs rose by 99,000 barrels per day (bpd), and overall refinery utilization rates climbed by 0.4 percentage points to 96.2% of total capacity, a high level indicating robust processing.

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Gasoline demand remained strong, consistent with the summer driving season. The proxy for demand, product supplied of finished motor gasoline, stood at 8.84 million bpd, a marginal decrease of just 1,000 bpd from the previous week.

Market Context

The data reflects the push by refiners to meet seasonal fuel consumption. "Ongoing strength in refining activity amid peak summer driving demand has encouraged a draw to crude inventories," said Matt Smith, director of Commodity Research at Kpler, in a note. Smith added, however, that the magnitude of the draw was "stymied by ongoing SPR releases and a slowing pace of crude exports."

Energy markets had a muted reaction to the report. U.S. gasoline futures briefly moved higher before paring gains, while both U.S. crude and Brent crude futures showed little change immediately following the data release.