U.S. crude stocks rose less than expected last week while inventories at the key Cushing, Okla., storage hub fell for an 11th straight week, according to data released by the Energy Information Administration (EIA) on March 7.
Crude inventories rose by 2.4 million barrels (bbl) in the week, which was less than the 2.7 million bbl increase analysts had forecast.
Crude stocks at the Cushing delivery hub fell 605,000 bbl, the EIA said. Inventories have dropped to the lowest level since late 2014 as outages on key pipelines have limited supplies to the hub and as the startup of a new pipeline increased outflows.
Oil prices pared losses after the data as most market participants had expected a bigger increase in inventories amid refinery maintenance season.
"The smaller-than-expected inventory build led to swift short covering," said Phillip Streible, senior market strategist at RJO Futures in Chicago.
"However, I don't believe that this strength will be long lived with rising U.S. production and a strengthening dollar," he said.
U.S crude production rose 0.8% from a week earlier to 10.37 million bbl/d last week, according to the EIA.
In a monthly report last week, the EIA said U.S. oil output rose to 10.057 million bbl/d in November, a revision from earlier estimates, the EIA said. December production fell 108,000 bbl/d to 9.949 million bbl/d.
The agency expects U.S. crude output in the fourth quarter of 2018 to reach an average of 11.17 million bbl/d.
Refinery crude runs rose by 53,000 bbl/d, EIA data showed. Refinery utilization rates rose by 0.2 percentage points.
Meanwhile, gasoline stocks fell by 788,000 bbl, a smaller decline than the 1.2 million bbl drop forecast by analysts in a Reuters poll.
Distillate stockpiles, which include diesel and heating oil, fell by 559,000 bbl, the EIA data showed, vs. expectations for a 1.2 million bbl drop.
Net U.S. crude imports rose last week by 668,000 bbl/d.