Crude Supply Drop Surprises Analysts

Crude Supply Drop Surprises Analysts

Crude-oil inventories dropped last week for the third straight period, down by 4.8 million barrels to 306.8 million barrels — 11.8 percent below year-ago levels, the Energy Department’s Energy Information Administration said in its weekly report.

Analysts expected a gain of 2.7 million barrels, according to a survey by Platts, the energy research arm of McGraw-Hill Cos.

Gasoline inventories rose by 2.9 million barrels, or 1.4 percent, to 209.1 million barrels, which were 3.3 percent above year-ago levels. Analysts expected stockpiles of the motor fuel to grow by only 900,000 barrels.

At the same time, U.S. refineries ran at 89.7 percent of total capacity on average, a gain of 1.8 percentage points from the prior week. Analysts expected capacity to rise by only 0.6 percentage point.

“We expect U.S. refining runs will rise further,” said Lehman Brothers analyst Paul Cheng. “Looking forward, we expect gasoline and distillate margin to slide with the spring turnaround and heating oil season behind us in both U.S. and Europe, absent any major unplanned outage.”

Inventories of distillate fuel, which include diesel and heating oil, also rose more than expected, climbing 2.3 million barrels to 111.7 million barrels for the week ended May 30. Analysts expected distillate stocks to rise by 1.6 million barrels.

Share this post