Crude oil stocks increased 2.63 million barrels at Cushing, Oklahoma, to 58.94 million barrels during the week ended March 27, U.S. Energy Information Administration (EIA) data showed.
Stocks at Cushing, the delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contract, equaled 83% of working storage capacity, EIA data showed.
Cushing has seen net inflows each week since December 5. Traders are taking advantage of later-dated futures contracts being more expensive than near-term delivery, making Cushing storage profitable.
For the week ended March 27, the front-month/sixth-month spread averaged minus $5.50 per barrel (/b), compared with minus $7.33/b the week prior.
The weekly build has averaged 2.4 million barrels during the last four weeks. Assuming this pace was to continue, Cushing would reach its working capacity by the end of April.
Total U.S. commercial crude oil stocks increased 4.766 million barrels to 471.444 million barrels the week ended March 27, EIA data showed.
Analysts surveyed Monday by Platts expected a 3.5 million-barrel build. Crude oil stocks built for the 12th consecutive week, despite production decreasing for the first time since late January.
Production fell 36,000 barrels per day (b/d) to 9.386 million b/d. Output in the continental U.S. decreased 37,000 b/d to 8.874 million b/d, while Alaskan production rose 1,000 b/d to 512,000 b/d.
Since mid-June 2014, when NYMEX crude oil future prices began plummeting, production has decreased on a weekly basis only five times.
Average weekly output rose 11.5% during that time period, even though front-month NYMEX crude oil prices more than halved.
Refineries were more active the week ended March 27, helping mitigate the crude oil build. Crude oil runs rose 198,000 b/d to 15.728 million b/d.
For the same reporting period a year ago, crude oil runs were 15.315 million b/d. In 2014, crude oil runs did not top 16 million b/d until the end of May.
The U.S. Gulf Coast’s crude oil runs were up 140,000 b/d to 8.31 million b/d. The region’s refinery utilization rate was unchanged at 91% of operable capacity.
The total U.S. refinery utilization rate increased 0.4 percentage point to 89.4% of operable capacity. Analysts had expected a 0.5 percentage-point increase.
Crude oil imports were down 44,000 b/d the week ended March 27 to 7.348 million b/d. Imports averaged 7.262 million b/d from the week ended February 27 through March 20.
The weekly drop was driven by imports from Colombia, Iraq, Kuwait and Venezuela. Accumulative imports from these four countries were down 971,000 b/d.
Imports from Saudi Arabia increased 552,000 b/d to 1.3 million b/d. Imports from Canada were up 308,000 b/d to 3.293 million b/d.
IMPLIED GASOLINE DEMAND* SOARS
U.S. Gasoline stocks fell 4.258 million barrels to 229.128 million barrels, a 4.1% surplus to the EIA five-year average for the same reporting period.
Analysts had expected a 1.25 million-barrel decline.
Gasoline implied demand* jumped 816,000 b/d to 9.435 million b/d, the highest level since the week ended December 26, and 7.35% above the five-year average for the same reporting period.
Distillate stocks increased 1.325 million barrels to 127.174 million barrels, compared with analysts’ expectation of a 1.2 million-barrel decline.
Despite the increase, distillate stocks were still 3.6% below the five-year average for the same reporting period.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.