In response to severe cold weather disruptions last month, U.S. crude inventories experienced a significant uptick as oil refiners scaled back operations, the Energy Information Administration (EIA) reported on Wednesday.
According to the EIA, crude inventories surged by 5.5 million barrels to reach 427.4 million barrels during the week ending February 2nd, surpassing analysts’ projections from a Reuters poll which anticipated a rise of 1.9 million barrels. Concurrently, crude stocks at the Cushing, Oklahoma delivery hub saw a marginal decline of 33,000 barrels for the week, as per the EIA.
Despite the notable increase in crude stockpiles, oil prices saw an immediate uptick following the release of the data. Brent and U.S. crude futures both edged higher, reaching $78.80 and $73.50 per barrel, respectively.
The EIA further disclosed that refinery crude runs decreased by 9,000 barrels per day, hitting their lowest level since January 2023. Additionally, utilization rates dropped by 0.5 percentage points, marking their lowest point since December 2022, according to the EIA data.
Notably, on the U.S. Gulf Coast, where refining capacity was hampered by last month’s severe weather, utilization rates reached their lowest level since September 2021, according to the data provided.
Giovanni Staunovo, an analyst at UBS, attributed the surge in crude inventories primarily to reduced refinery operations, influenced by weather-related factors and maintenance activities, alongside heightened net imports of U.S. crude. Despite this, Staunovo noted a rebound in U.S. oil demand, leading to significant draws in refined products.
In addition to the rise in crude inventories, the EIA reported a substantial decline in U.S. gasoline stocks, which fell by 3.1 million barrels to 251 million barrels during the week, contrasting sharply with analysts’ expectations of a 140,000-barrel build, as indicated by a Reuters poll.
Distillate stockpiles, including diesel and heating oil, also experienced a notable decrease of 3.2 million barrels to reach 127.6 million barrels for the week, compared to expectations for a 1 million-barrel drop, according to EIA data.
Furthermore, net U.S. crude imports rose by 1.6 million barrels per day, as per the EIA’s findings.
Concurrently, U.S. oil production rebounded to a record high of 13.3 million barrels per day during the same week.