According to the Energy Information Administration (EIA), U.S. crude oil, gasoline, and distillate inventories experienced significant increases last week, driven primarily by low crude exports and a decline in implied demand for refined products. The EIA reported a 5.8 million barrel rise in crude inventories, reaching 457.3 million barrels for the week ending April 5, surpassing analysts’ expectations of a 2.4 million-barrel increase. This unexpected surge led to a drop in crude futures prices.
Brent futures were observed trading 3 cents lower at $89.39 a barrel, while West Texas Intermediate crude futures (WTI) declined by 11 cents to $85.12 a barrel. UBS analyst Giovanni Staunovo noted that the market’s reaction suggests the build was perceived as an isolated incident, primarily driven by low crude exports, with most of the increase concentrated in the Gulf Coast.
The EIA also revealed that net U.S. crude imports rose by 1.1 million barrels per day, as exports fell by 1.3 million barrels per day to 2.71 million barrels per day. Furthermore, product supplied by refineries, serving as a proxy for fuel demand, averaged 20 million barrels per day over the past four weeks, marking a 0.4% decrease from the same period the previous year. Refinery utilization declined by 0.3 percentage point to 88.3% of total capacity, while refinery inputs decreased by 115,000 barrels per day.
Additionally, the EIA reported a decrease of 170,000 barrels in crude stocks at the Cushing, Oklahoma delivery hub for WTI. Gasoline stocks rose by 700,000 barrels to 228.5 million barrels, contrary to forecasts for a 1.3 million-barrel draw, leading to extended losses in U.S. gasoline futures after the surprise build. Distillate stockpiles, encompassing diesel and heating oil, surged by 1.7 million barrels to 117.7 million barrels, in contrast to expectations for a 1.2 million-barrel decrease.