U.S. crude oil inventories fell last week, but an unexpected build in gasoline stocks and weak demand for the motor fuel offset market optimism over the crude drawdown, the Energy Information Administration (EIA) said June 14.
Crude inventories fell 1.7 million barrels (bbl) in the week to June 9, compared with analysts' expectations for a decrease of 2.7 million bbl, as imports fell 481,000 bbl/d.
Refinery crude runs also rose 29,000 bbl/d and utilization rates rose 0.3 percentage point to 94.4% of total capacity.
However, gasoline stocks rose 2.1 million bbl, compared with analysts' expectations in a Reuters poll for a 457,000 bbl drop.
Gasoline inventories currently sit at 242.4 million bbl, or 9%, above the five-year average of 223 million bbl, according to EIA data.
Gasoline demand over the past four weeks in the United States, the world's top consumer of the motor fuel, was 9.53 million bbl/d, off 1.2% from a year ago.
"This is very unusual for this time of the year, when gasoline demand is supposed to pick up," said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany.
High inventories have weighed on the futures' market's crack spreads, a measure of refining margins, throughout spring when refiners produce more gasoline for driving season. But inventories usually start drawing down in the peak demand summer driving season.
After the data, the gasoline spread to crude slumped about 4% to its lowest since May 4.
Reformulated blendstock gasoline futures dropped 3.4% to $1.449 a gallon as of 9:59 a.m. CT (14:59 GMT). West Texas Intermediate crude futures, meanwhile, were down 3.4% to $44.92/bbl, the lowest intraday level since May 5.
"The build in gasoline stocks was a result of a further decline in gasoline demand, which marks a very subdued start into the summer driving season," said Fritsch.
Crude stocks at the Cushing, Okla., delivery hub fell by 1.2 million bbl, EIA said.
Oil inventories have remained high several months into a deal by OPEC producers with non-member nations to reduce supply by 1.8 million bbl/d.
OPEC agreed to extend that deal that began in January through March 2018, but ongoing growth in U.S. production, along with exemptions for non-members Nigeria and Libya, have offset those cuts to some extent.
In a report on June 14, the International Energy Agency said rising U.S. output will contribute to supply growth exceeding demand growth in 2018.
U.S. crude production has been steadily growing and last week rose to 9.33 million bbl/d, up 12,000 from the previous week, the EIA said.