US crude stocks rose unexpectedly in the most recent week as production reached its highest level since before the outset of the coronavirus pandemic, the Energy Information Administration said on Wednesday.
Crude inventories rose by 2.4 million barrels in the week to April 1 to 412.4 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop. That increase was in part due to a near 4 million- barrel release from the US strategic reserves.
The Biden administration plans to release 1 million barrels of oil every day for the next six months to quell price increases in the wake of Russia’s invasion of Ukraine. US production also rose, hitting 11.8 million barrels per day, the highest since December 2021.
“Crude oil is not showing any sign of slowing down. Domestic production is at a COVID-era high,” said Bob Yawger, director of energy futures at Mizuho.
The question is whether these releases - and rising output - will ultimately help refiners rebuild sinking products inventories, where markets are tightening due to heavy demand and a supply shortage in Europe, which depends on Russian imports.
Distillate stockpiles, which include diesel and heating oil, rose by 771,000 barrels in the week to 114.3 million barrels. Distillate stocks on the US East Coast, however, are now at their lowest level since April 2003. The decline in supply has caused prices of some products to surge, including jet fuel.
“Products in general are showing demand destruction in the wake of high prices,” said John Kilduff, partner at Again Capital LLC in New York. The four-week moving average for product supplied - a rough proxy for consumer demand - dipped in the most recent week and has been falling since early February.
Refinery crude runs rose by 35,000 barrels per day in the last week, EIA said. Refinery utilization rates rose by 0.4 percentage point in the week to 92.5% of overall capacity, the highest since June.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.7 million barrels in the last week, EIA said.
US gasoline stocks fell by 2 million barrels in the week to 236.8 million barrels.
US crude was down $2.15 a barrel, or 2.1%, at $99.81 as of 11:25 a.m. EDT (1525 GMT) while Brent lost $1.95 to $104.69.