Commercial crude oil supplies contracted sharply again in the United States last week, according to figures released Wednesday by the U.S. Energy Information Agency (EIA), driven by a surge in demand for refined products.
In the week ended March 31, U.S. commercial inventories fell by 3.7 million barrels, more than double what analysts expected (-1.7 million), according to a Bloomberg consensus. This decline follows a massive 7.5 million barrel drop the week before. In a small event, strategic reserves, stable since the beginning of January, fell slightly by 400,000 barrels.
Under a law passed in Congress in 2015, the U.S. government will be required to draw down some 26 million barrels from these reserves by June to sell on the market. The significant reduction in commercial inventories comes despite a slight slowdown in the refinery utilization rate, which fell to 89.6% from 90.3% a week earlier.
In addition, the period was marked by a rebound in imports (+34% over one week), which is likely to increase the amount of black gold available on the U.S. market and, potentially, to inflate inventories. “But exports were buoyant” (+14%), noted Matt Smith of Kpler. “As for the refineries, even though they have stalled, they have remained at a high level” of production, absorbing more than 15.6 million barrels of crude per day.
Another factor supporting the melting of inventories is that the EIA made only a moderate statistical adjustment from previous weeks in terms of volumes coming into the market. It added only 918,000 barrels per day to the recorded quantities, compared to double that amount the week before. Demand continued to show signs of strengthening, thanks to the revival of gasoline, kerosene, but especially distilled products (+14% over one week), which includes diesel. “These numbers are good,” commented Matt Smith, for whom “the trend is positive.”
On average over four weeks, the indicator followed by analysts, the demand for gasoline is thus 3.9% higher than its level at the same time one year ago. Another indicator of sustained demand, gasoline inventories fell by 4.1 million barrels on the week, double the expected -2 million. Production remained unchanged at 12.2 million barrels per day.
