Hurricane Harvey shuffled up inventories of crude oil and products in the September 1 week, with crude oil inventories up 4.6 million barrels to 462.4 million, 3.8 percent below last year's level and the first weekly increase since June 23. But product inventories fell sharply as expected due to refinery shutdowns in the Texas oil patch where Hurricane Harvey raged, with gasoline down 3.2 million barrels to 226.7 million, 0.5 percent below last year's level, and distillates down 1.4 million barrels to 147.8 million, 6.6 percent below last year. Analysts expected a similar increase in crude oil inventories although the American Petroleum Institute, a private industry group, Wednesday reported a 2.5 million barrel rise in its weekly report.
Refinery operation plunged to 79.7 percent of capacity, 17.3 percentage points below the prior week's level. Gasoline production fell to 9.5 million barrels per day, down from 10.6 million per day in the prior week, while distillate production fell to 4.5 million barrels per day from 5.1 million.
Daily crude oil imports decreased by 822,000 barrels per day to 7.1 million, taking the 4-week average to 8.0 million barrels per day, 2.8 percent less than in the same period last year.
The demand side softened, though not dramatically, with total product supplied over the last 4 weeks averaging 20.8 million barrels per day, up 0.2 percent from the same period last year. Gasoline supplied averaged over 9.5 million barrels per day, down 1.0 percent from the same period last year. Distillate demand softened slightly but remained very strong, averaging about 4.1 million barrels per day, up 9.9 percent from the same period last year.
The pileup of crude oil inventories resulting from sharply depleted refinery capacity in the hurricane region pushed WTI futures prices below $46.00 per barrel last week, but prices have since bounced back strongly to over $49.00 per barrel on the back of a falling dollar and expectations that resumed refinery capacity will draw down the temporarily built-up inventories fairly soon. Still not clearly assessed disrupted exploration and development activities are also encouraging to oil bulls. Watch for tomorrow's Baker Hughes U.S. Rig Count, which last week left the count for 47 counties in Texas, home to 455 rigs, unchanged because of the inability to verify their status.