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The Energy Information Administration said today that US crude oil inventories fell 7.66 million barrels last week, taking the total to 350.2 million barrels, the lowest stockpile of crude in almost two years. A drop of just 1.3m barrels had been expected, based on a Bloomberg poll of economists.
The decline in oil supplies is the result of lower crude imports, which dropped 13%, and an increase in fuel demand, and comes in spite of increase domestic production, with US output rising 14,000 barrels a day to a total of 8.16 million for last week, which is the highest rate of production since 1988.
Crude oil futures for February rose 1.87% to $94.27 a barrel by mid-afternoon in New York, the price also being boosted by a jump in manufacturing activity around the New York state, according to the New York Fed’s latest survey.
US supplies of gasoline increased again, climbing 6.18 million barrels last week, more than twice the amount that had been forecast. Such a large rise in one of crude’s refined products is a bearish factor, but was offset by a surprise drop in distillate fuel. Distillate inventories declined by 1.02 million barrels, when an increase of more than 1 million had been expected.
The drop in crude inventories could have been even larger, but for the cold weather. Severe cold from the polar vortex forced some refinery units to close last week, which would explain a sizeable drop in run rates. Capacity utilisation fell to 90%, a 2.3% fall from the week before.