Data from the Energy Information Administration (EIA) released on Friday revealed that U.S. crude stocks fell more than anticipated due to robust refinery activity and increased distillate demand during the holiday season.
Key Details:
Crude Inventory Changes:
Crude inventories dropped by 4.2 million barrels, reaching 416.8 million barrels for the week ending December 20. This was significantly more than analysts’ expectations of a 1.9 million-barrel draw.
Refinery Demand:
John Kilduff, a partner at Again Capital in New York, noted the report’s supportive nature, attributing the demand for crude to strong refinery runs and holiday driving. However, he cautioned that driving demand might decline post-holiday season.
Cushing Hub Levels:
Crude stocks at the Cushing, Oklahoma delivery hub decreased by 320,000 barrels to 22.7 million barrels, the lowest since October 2023. Traders consider tank storage below 20 million barrels as nearing operational lows.
Regional Insights:
Stocks along the U.S. Gulf Coast, a crucial refining area, fell to 231.5 million barrels, marking the lowest level since September 2023.
Refinery Operations:
Refinery crude runs increased by 205,000 barrels per day, with utilization rates rising by 0.7 percentage points to 92.5%.
Market Reaction:
Following the report, Brent and U.S. crude futures saw gains. Brent crude futures rose by 92 cents (1.3%) to $74.18 per barrel, while U.S. West Texas Intermediate crude futures increased by $1 (1.4%) to $70.62 per barrel.
Gasoline and Distillate Stocks:
U.S. gasoline stocks increased by 1.6 million barrels to 223.7 million barrels, surpassing analyst expectations of a 1.1 million-barrel draw.
Distillate stockpiles, including diesel and heating oil, fell by 1.7 million barrels to 116.5 million barrels, compared to expectations for a 313,000-barrel drop.
Import Trends:
Net U.S. crude imports rose by 995,000 barrels per day during the week.