Sharp declines in product inventories overshadowed a small increase in crude oil stocks, which rose 0.9 million barrels in the October 20 week to 457.3 million, 2.3 percent below the level a year ago. But inventories of gasoline fell 5.5 million barrels to 216.9 million, 3.4 percent below the year ago level, while distillates fell 5.2 million barrels to 129.2 million, down 15.2 percent year-on-year. WTI prices rose about 20 cents to around $52.35 per barrel immediately following the release of the report.
Refineries operated at 87.8 percent of their operable capacity in the week, up 3.3 percentage points from the prior week as Gulf of Mexico production idled by Hurricane Nate gradually rebooted. Gasoline production nevertheless decreased, averaging 9.9 million barrels per day, while distillate production did rise slightly, averaging 4.8 million barrels per day.
Average daily crude imports rose sharply by 640,000 barrels to 8.1 million, putting the 4-week average at 7.6 million barrels per day, 3.2 percent above last year at this time.
The demand side softened, with total product supplied over the last four weeks averaging 19.6 million barrels per day, down 3.6 percent from the same period last year. Motor gasoline supplied during the period average 9.3 million barrels per day, up 1.6 percent from the same period last year, while distillate fuel product supplied average 3.8 million barrels per day, 6.5 percent below last year's level.
The fall registered in product inventories probably reflects the fact that refineries have not yet recovered to pre-hurricane capacity, and points to the near term resumption of the steady and steep decline in crude oil inventories since April. This decline, driven mostly by OPEC production cuts, has brought supply-demand close to equilibrium and lifted oil prices close to 5-month highs. However, at $52 per barrel, shale oil exploration and development activity becomes quite lucrative again, increasing production down the road, restocking inventories, and probably capping further price increases.