RTRS: U.S. crude and product stocks up more than expected
U.S. crude oil inventories jumped last week as imports increased more than expected and refiners increased production, according to government data released Wednesday.
"The big build in crude stocks is very bearish and occurred as supplies held in tankers for year-end tax purposes finally were delivered to refiners," said Phil Flynn, analyst at Alaron Trading in Chicago.
"While the current contango is encouraging refiners to store for rainy days, it also shows you that we are swimming in petroleum supplies here. We have more than what we need at this time, with demand being low."
Crude stockpiles rose 6.7 million barrels to 325.4 million barrels in the week ending January 2, far exceeding a forecast for a 900,000-barrel build, the Energy Information Administration (EIA) said in the weekly report.
The build came as U.S. crude oil imports increased by 1.2 million barrels per day from the previous week to reach an average of about 10.5 million barrels per day last week.
"A strong contango for oil futures is leading to stronger demand for imported oil, which is being stored to sell at higher prices down the road," said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire.
In a contango market, the front month futures contract is cheaper than later months, giving an incentive to maximize barrels in storage to sell later at higher prices.
Crude oil stocks at the NYMEX delivery point in Cushing, Oklahoma, rose 4.1 million barrels, reaching a record high of 32.2 million barrels.
The previous record for the Cushing delivery point of 28.7 million barrels was set in the week ending December 19.
Oil product inventories also rose as refinery utilization, which had been forecast to remain nearly unchanged with a 0.1 percent rise, climbed by 2.1 percent to 84.6 percent.
Distillate inventories rose 1.8 million barrels to 137.8 million, more than the 1.0 million barrel build expected.
Gasoline stockpiles climbed 3.3 million barrels to 211.4 million barrels, more than the anticipated 800,000 barrel rise.
Total U.S. product demand over the past four weeks was 2.9 percent below last year's levels at 20.11 million barrels per day.
