Unexpected Decline in US Inventory Lent Support to Oil Price
The front-month WTI crude oil contract strengthened to the highest level in more than a month. The WTI-Brent spread also narrowed to the level not seen since March 31. The recovery in WTI crude price was helped by the unexpected decline in US oil inventory. The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks dropped -0.54 mmb to 1394.88 mmb in the week ended May 8. Crude oil inventory surprisingly dropped -0.75 mmb (consensus: +4.15 mmb) to 531.48 mmb. Stockpile fell in 3 out of 5 PADDs. PADD 2 (Midwest) saw a decline of -3.37 mmb. Cushing stock fell -3 mmb to 62.44 mmb. Utilization rate shrank -2.6 percentage points to 67.9% while crude production slipped -0.3M bpd to 11.6M bpd for the week. Crude oil imports slipped -0.32M bpd to 5.39M bpd in the week. Concerning refined oil product inventories, gasoline inventory dropped -3.51 mmb to 252.89 mmb as demand added +11% to 7.4M bpd. The market had anticipated a -2.22 mmb decrease in stockpile. Production jumped +11.8% to 7.5M bpd while imports rose +32.1% to 0.49M bpd during the week. Distillate inventory gained +3.51 mmb to 155 mmb. The market had anticipated a +2.86 mmb increase. Demand jumped +22% to 3.82 bpd. Production slipped -3.7% to 4.89 mmb while imports declined -42.6% to 0.19M bpd during the week.
Released after market close on Wednesday, the industry-sponsored API estimated that crude oil inventory gained +7.6 mmb during the week. For refined oil products, gasoline stockpile dropped -1.9 mmb while distillate rose +4.7 mmb.