WTI futures pare gains as US fuel inventories surge

West Texas Intermediate and Brent crude pared gains accumulated during the day after the Energy Information Administration reported hefty gains in petroleum products inventories and a rise in US crude output, offsetting a drop in crude stockpiles.

US crude for delivery in February traded 0.63% higher at $48.23 per barrel at 15:46 GMT, having shifted in a daily range between $49.31 and $46.83. The contract plunged 4.22% on Tuesday to $47.93, the lowest close since April 21st, 2009.

Meanwhile on the ICE, Brent for settlement in the same month was down 0.41% at $50.89 a barrel. Prices ranged between $51.84 and $49.66 during the day. The European benchmark crude dropped 3.78% to $51.10 yesterday, the lowest close since April 30th, 2009. Brent was at a premium of $2.66 to its US counterpart, down from Tuesday’s settlement at $3.17.

Data by the EIA showed that US crude oil inventories slid by 3.062 million barrels to 382.4 million in the week ended January 2nd, beating analysts projections for a fall of 0.7-0.9 million barrels. However, inventories at the Cushing, Oklahoma storage hub rose to 32.1 million barrels from 30.8 million a week earlier.

US crude production edged up by 11 000 barrels per day to 9.132 million, drawing closer to a multi-decade record reached in the week ended December 12th, 2014. Imports also sounded a negative tone for the state of demand, having fallen to 6.856 million bpd from 7.061 million a week earlier, while the four-week average of inbound shipments was at 7.328 million bpd, 4.6% below year-ago levels.

Refineries operated at 93.9% of their operable capacity, down from 94.4% the previous week. Both gasoline and distillate fuel production decreased and averaged 8.7 and 5.2 million barrels per day, respectively.

Further pointing to softening demand, distillate fuel inventories surged by 11.205 million barrels last week to 136.9 million, confounding analysts expectations for a moderate increase of 1.860 million. Motor gasoline stockpiles also registered a hefty gain, having risen by 8.115 million barrels to 237.2 million, whereas analysts had forecast a jump of 3.380 million barrels.