Crude oil inventories fell 2.4 million barrels in the October 27 week to 454.9 million, 5.7 percent below the level a year ago. Product inventories also fell, with gasoline down 4.0 million barrels to 212.8 million, 4.9 percent below last year's level, and distillates down 0.3 million barrels to 128.9 million, a sharp 14.4 percent year-on-year drop. After rising above $55 per barrel to a two-year high, driven partly by Tuesday's report from the American Petroleum Institute, a private industry group, informing of an even larger 5.87 million barrel decline in crude stocks for the week, WTI prices fell back about 40 cents to around $54.60 immediately following the release of today's EIA report.
Refineries operated at 88.1 percent of their operable capacity in the week, up 0.3 percentage points from the prior week but still not quite at the usual level of operation as companies gradually reboot following hurricane related shutdowns. Production did increase in the week, averaging 10.2 million barrels per day for gasoline and 5.0 million barrels per day for distillates.
Crude oil imports fell by 552,000 barrels per day in the week to an average of 7.6 million barrels per day, putting the 4-week daily average at 7.7 million barrels, unchanged from the same period last year.
The demand side remained soft overall, with total product supplied over the last four weeks averaging 19.5 million barrels per day, down 3.4 percent year-on-year. But the product breakdown shows that motor gasoline supplied during the period was actually up 2.8 percent year-on-year, averaging 9.3 million barrels per day, while it was distillates that accounted for the overall weakness, averaging 3.7 million barrels per day, down 9.3 percent from the year ago level.
Helped by OPEC production cuts and hurricane disruptions in U.S. oil-producing states, the steady decline in crude oil inventories since April has brought supply-demand closer to equilibrium and lifted prices to their highest level in over two years. But demand remains soft due to a shift to other energy sources, and with production breakeven prices below $50 per barrel shale oil exploration and development activities become lucrative again, most likely increasing production down the road and capping further price increases.