U.S. crude oil and distillate inventories rose unexpectedly and fuel demand slipped last week, the Energy Information Administration said on Wednesday, as a sharp outbreak in coronavirus cases hit U.S. consumption.
U.S. crude production ticked higher and refined products supplied, a proxy for fuel demand, declined. The market has recovered from the doldrums of April, when U.S. prices briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the pandemic.
Crude inventories rose 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day (bpd), up 100,000 bpd.
Distillate stockpiles, which include diesel and heating oil, rose 1.1 million barrels to 177.9 million barrels, their highest since December 1982, data showed. Analysts had expected a 618,000-barrel drop.
Gasoline stocks fell 1.8 million barrels, more than forecasts for a 1.4 million-barrel drop as refinery utilization rates fell 0.6 percentage point to 77.9% of capacity. U.S. East Coast refinery rates plunged to 36.6%, their lowest on record, according to the data going back to 2010.
The recovery in U.S. demand has been slower than much of the world because of the magnitude of the COVID-19 pandemic, which has killed more than 600,000 worldwide, including more than 142,000 in the United States.
Overall product supplied fell 4% to 17.7 million bpd, with the four-week average of 17.9 million bpd still nearly 15% below the year-ago period.
Oil prices trimmed losses as the report was in line with Tuesday’s American Petroleum Institute report that showed a 7.5 million-barrel crude drawdown. U.S. crude futures fell 45 cents to $41.47 by 10:43 a.m. ET (1443 GMT), while Brent lost 43 cents to $43.89.
“The demand recovery we’ve seen from the bottom seems to be stalling and that’s why the market is negative,” said Phil Flynn, senior analyst at Price Futures Group.