Crude stocks fell in the most recent week, while distillate inventories rose slightly and demand rebounded, the U.S. Energy Information Administration said Wednesday.
Oil prices have slumped on concerns about demand, but U.S. demand figures improved modestly, allaying some of those fears. Refinery activity fell as maintenance season approaches, though refiners still face a challenge in restocking distillate inventories before the winter.
Crude inventories fell by 3.3 million barrels in the week to Aug. 26 to 418.3 million barrels, a steeper decline than the 1.5 million-barrel drop forecasters predicted in a Reuters poll.
Distillate stockpiles, which include diesel and heating oil, rose by 111,000 barrels to 111.7 million barrels, versus expectations for a 960,000-barrel drop.
At this time a year ago distillate stocks were at 136.7 million barrels. The biggest decline was on the East Coast, among the busiest areas of the country for heating oil use.
“Distillate stocks stopped their slide into the abyss and started building which is what’s needed in the current market environment. But the build is small and will need to be much greater as we head past September,” said Robert Yawger, director of energy futures at Mizuho.
U.S. gasoline product supplied rose in the most recent week but over the last four weeks is down 6.4% from a year ago. Total product supplied hit 20.1 million bpd, but is down 6.4% from a year earlier.
“We saw a snapback in gasoline demand from the week before, but it’s still not as impressive as we’d like to see. It’s a mixed bag on demand but total supplied back above 20 million barrels a day is very supportive,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Refinery utilization rates fell by 1.1 percentage points to 92.7% and should fall further ahead of maintenance season.
Oil prices rose modestly on the news but were down on the day; U.S. crude lost 1.3% to $90.36 a barrel while Brent dropped 2.8% to $96.52 a barrel.