Crude Oil Pauses Following Mixed Inventory Reports

Crude oil prices edged higher on Wednesday following the release of the Department of Energy’s inventory report.  The EIA’s report showed a draw in crude oil inventories which conflicted with Tuesday’s American Petroleum Institute’s (API) report that showed a build.  Imports for the week increased, along with production, but a larger than expected draw in gasoline could keep the oil complex buoyed.

Technicals

Crude oil prices paused on Wednesday, edging slightly lower mid-day. Support on crude oil is seen near the 10-day moving average at 70.45, while resistance is seen near 71.92, which is the May highs. Momentum is neutral to negative as the fast stochastic generated a crossover sell signal in overbought territory.

Refinery Inputs Increased

The EIA reported that U.S. crude oil refinery inputs averaged over 16.6 million barrels per day during the week ending May 11, 2018, 149,000 barrels per day more than the previous week’s average. Refineries operated at 91.1% of their operable capacity last week. This is up week over week but still down year over year. Gasoline production increased last week, averaging about 10.5 million barrels per day. Distillate fuel production increased last week, averaging over 5.0 million barrels per day.

Imports Rose this Week

The higher run rates were counter by an increase in imports. The EIA reported that U.S. crude oil imports averaged 7.6 million barrels per day last week, up by 278 thousand barrels per day from the previous week. On average over the past month crude oil imports averaged about 8.0 million barrels per day, 4.3% less than the same month last year.

Inventories Declined

Despite rising imports stocks moved lower. The EIA revealed that U.S. commercial crude oil inventories decreased by 1.4 million barrels from the previous week. At 432.4 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Gasoline inventories decreased by 3.8 million barrels last week while distillate fuel inventories decreased by 0.1 million barrels last week. Total commercial petroleum inventories decreased by 0.7 million barrels last week.

Demand Remains Robust

Demand remain strong. The EIA reported that total products demand the last month averaged about 20.1 million barrels per day, up by 1.5% year over year. Over the last month, gasoline demand averaged about 9.4 million barrels per day, up by 0.7% year over year. Distillate fuel demand averaged about 4.2 million barrels per day over the last four weeks, up by 3.0% year over year.

The API Reported Mixed Data

The American Petroleum Institute (API) reported a surprise build of 4.854 million barrels of crude oil inventories for the week ending May 11, compared to analyst expectations that this week would see a smaller draw in crude oil inventories of 763,000 barrels. The API reported a draw in gasoline inventories for week ending May 11 in the amount of 3.369 million barrels, a bigger draw than the 1.421-million-barrel draw that analysts had expected.