US crude oil and distillate inventories fell last week as fuel demand increased to its highest level since August 2019, the Energy Information Administration said on Wednesday.
Crude inventories fell by 1 million barrels in the week to Jan. 28 to 415.1 million barrels, compared with expectations in a Reuters poll for a 1.5 million-barrel rise. Supplies have been declining over the past two months due to strong demand and as production struggles to keep up.
Overall product supplied rose to 21.6 million barrel per day for the last four weeks, the highest rate of demand since August 2019. That figure was bolstered by strong distillate demand, which has far surpassed pre-pandemic levels, even if gasoline demand has been a bit soft in recent weeks.
"The lack of product supply worldwide is overwhelming which has given us strength across the complex and it seems to be continuing," said Tony Headrick, energy markets analyst at CHS Hedging.
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Distillate stockpiles, which include diesel and heating oil, fell by 2.4 million barrels in the week. Distillate stocks on the US East Coast are at their lowest since April 2020, the EIA said.
"As we drift towards the three-year low in US storage levels, it justifies the pop we are seeing in the market," said Bob Yawger, director of energy futures at Mizuho. "Gasoline demand was not good also due to the weather."
US gasoline stocks rose by 2.1 million barrels last week to 250 million barrels, their highest in a year.
Refinery crude runs fell by 249,000 bpd and utilization rates fell by 1 percentage point last week.
Net US crude imports rose by 1.27 million bpd.
Oil benchmarks were little changed on the data. Brent rose 7 cents to $89.23 a barrel as of 10:50 a.m. EST (1550 GMT) while US crude lost 11 cents to $88.10 a barrel.
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