US crude oil stockpiles fell more than expected to their lowest levels since October 2018, but gasoline inventories surged due to weak demand, the Energy Information Administration said on Wednesday.
Crude inventories fell by 4.6 million barrels in the week to Jan. 7 to 413.3 million barrels, compared with analysts' expectations in a Reuters poll for a 1.9 million-barrel drop.
US crude inventories have dropped for seven consecutive weeks, and overall inventories have been tightening across the globe as major producers struggle to increase supply even as demand rises.
Major holders of crude barrels in the US Gulf Coast have been reducing inventories. Overall, stocks at the Gulf, where roughly half of US refining capacity is located, fell to their lowest levels since January 2020.
Oil prices shrug off Omicron to reach two-month high
US gasoline stocks rose by 8 million barrels in the week to 240.8 million barrels, compared with expectations for a 2.4 million-barrel rise.
Gasoline product supplied fell last week to 7.9 million barrels per day, its lowest level since February 2021. The four-week moving average dropped to 8.7 million bpd.
"In a matter of weeks, we've fallen to really paltry demand - we're approaching pandemic type demand levels and I don't know if it is Omicron-related or not but people are hunkering down in a big way," said John Kilduff, partner at Again Capital in New York.?
Crude stocks at the Cushing, Oklahoma, delivery hub for US crude futures fell by 2.5 million barrels last week, the EIA said.
"The freeze in the Dakotas shut the Keystone pipe for one day - that's where the Cushing number is coming from," said Robert Yawger, director of energy futures at Mizuho.
Oil prices added to gains on the news, with US by 10:46 a.m. EST (1546 GMT), while Brent rose 92 cents to $84.64 a barrel.
The crude drawdowns came even as refiners cut activity, with runs down by 294,000 bpd and utilization rates falling 1.4 percentage points in the week.
Distillate stockpiles, which include diesel and heating oil, rose by 2.5 million barrels.
Net US crude imports rose last week by 784,000 bpd, the EIA said.
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