U.S. Crude Oil Inventories Drop Amid Severe Winter Weather

The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories experienced a larger-than-expected decrease last week. The decline was attributed to reduced production and refinery runs due to severe winter weather conditions across the country.

Inventory Details

According to the EIA, commercial crude oil stocks, excluding the Strategic Petroleum Reserve (SPR), decreased by 9.2 million barrels to 420.7 million barrels in the week ending Jan. 19. This figure is approximately 5% below the five-year average for this time of year. Analysts surveyed by The Wall Street Journal had anticipated a decline of only 1.4 million barrels.

During the same period, storage in the SPR increased by 920,000 barrels to reach 356.5 million barrels. Additionally, oil stored at Cushing, Okla., the Nymex delivery hub, decreased by 2 million barrels to 30.1 million.

Refinery Runs and Crude Futures

Refineries in the U.S. reduced their capacity utilization to 85.5% compared to 92.6% the previous week. This decline aligns with expectations of a 0.6 percentage point decrease in refinery runs.

Crude futures showed upward movement on Wednesday. West Texas Intermediate for March delivery rose by 0.9% to $75.05 per barrel, while the international benchmark Brent increased by 0.6% to $80.06 per barrel.

Gasoline and Distillate Stocks

U.S. gasoline stockpiles registered an increase of 4.9 million barrels, totaling 253 million barrels. This surpassed expectations of a 1.5 million-barrel build and left gasoline inventories approximately 1% above the five-year average, according to the EIA.

In contrast, distillate stocks, mainly consisting of diesel fuel, decreased by 1.4 million barrels to 133.3 million barrels. This figure is 4% below the five-year average. Expectations had predicted a decline of 700,000 barrels in distillate inventories.

Summary of U.S. Oil Inventory Changes

The following table summarizes the change in U.S. oil inventories for the week ending Jan. 19:

| Type | Change (in millions of barrels) | | ----------- | ------------------------------- | | Crude | -9.2 | | Gasoline | 4.9 | | Distillates | -1.4 | | Refinery Use| -7.1 |

Note: Refinery use is measured in percentage points.

In conclusion, severe winter weather conditions led to a larger-than-expected decrease in U.S. crude oil inventories, while gasoline stockpiles experienced an unexpected increase. Distillate stocks decreased as well during the same period.