Crude Oil Futures Affected by Sharp Increase in Gasoline Supply

Total gasoline inventories increased by 3.7 million barrels last week and are now well above the upper limit of the five-year average range. Total motor gasoline supplied (the EIA’s measure of consumption) averaged more than 8.8 million barrels a day over the past four weeks — a drop of about 0.3% compared with the same period a year ago.

Distillate inventories rose by 1.6 million barrels last week and remain in the lower half of the average range. Distillate product supplied averaged more than 3.9 million barrels a day over the past four weeks, up about 9.3% when compared with the same period last year. Distillate production totaled 4.9 million barrels a day last week, up about 200,000 barrels a day compared with the prior week.

The American Petroleum Institute last night reported that crude inventories remained unchanged last week, together with a rise of 1.3 million barrels in gasoline supplies and a rise of 500,000 barrels in distillate supplies. Platts estimated a drop of 2 million barrels in crude inventories, a rise of 1 million barrels in gasoline inventories and a rise of 1 million barrels in distillate inventories.

Crude prices were down about 0.2% before the EIA report at around $95.00 a barrel and slipped further to around $94.60 shortly after the report was released.

For the past week, crude imports averaged 8.3 million barrels a day, down about 138,000 barrels a day from the previous week. Refineries were running at 90.2% of capacity, with daily input of 15.7 million barrels a day, about 200,000 barrels a day more than the previous week.

With both refining throughput and imports up this week, it continues to be likely that refiners are increasing their blending of heavier, cheaper imported crude with lighter North American crude to keep their margins high. The high inventory level of gasoline seems likely to translate into more gasoline exports.

The United States Oil ETF (NYSEMKT: USO) is down 1.5%, at $33.25 in a 52-week range of $29.02 to $37.17.

The United States Gasoline ETF (NYSEMKT: UGA) is also down 1.5%, at $53.61, in a 52-week range of $45.35 to $65.86.

The United States Brent Oil ETF (NYSEMKT: BNO) is down 0.6%, at $76.57 in a 52-week range of $64.52 to $88.71.