U.S. crude stockpiles unexpectedly drop for first time since January: EIA

By David Gaffen

(Reuters) – U.S. crude oil stockpiles surprisingly fell last week, including at the Cushing, Oklahoma, storage hub, the first time supply has dropped since the coronavirus pandemic choked off fuel demand in the in the United States.

Crude inventories fell by 745,000 barrels in the week to May 8 to 531.5 million barrels, the U.S. Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 4.1 million-barrel rise. That was the first decline after 15 weeks of increases.

Stocks in Cushing fell by 3 million barrels in the last week, EIA said. The hub, coming into this week’s data, is more than 80% full, as producers find themselves with fewer places to store oil.

Crude oil production dropped 300,000 barrels per day (bpd) to 11.6 million bpd, its lowest since December 2018.

Fuel demand rebounded in the most recent week, though over the past four weeks still remains 23% below the year-ago average.

“The pretty desperate picture we’ve seen because of the drop in demand, maybe we are seeing signs it’s beginning to thaw,” said Gene McGillian, vice president of market research at Tradition Energy.

“The market should take some heart from the numbers but we need to see more than one week of data.”

Oil prices rallied briefly before returning to levels seen prior to the report. U.S. crude futures were down 37 cents, or 1.4%, to $25.40 a barrel while Brent dropped 1.5%, or 48 cents, to $29.52 a barrel.

Net U.S. crude imports fell last week by 300,000 bpd in the last week, EIA said, to 1.9 million bpd – the lowest ever.

Refinery crude runs fell by 593,000 bpd in the last week, EIA said. Refinery utilization rates fell by 2.6 percentage points in the week to 67.9% of total capacity, not far from an all-time low.

U.S. gasoline stocks fell by 3.5 million barrels to 252.9 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for by 2.2 million-barrel drop. Gasoline inventories have declined in recent weeks due to reduced refining activity.

Distillate stockpiles , which include diesel and heating oil, rose by 3.5 million barrels in the week to 155 million barrels, versus expectations for a 2.9 million-barrel rise, the EIA data showed.

(Reporting By David Gaffen; additional reporting by Laila Kearney and Laura Sanicola; Editing by Marguerita Choy)