Crude oil inventories in the United States dropped far more than traders expected last week, with the American Petroleum Institute flagging an 11.1 million barrel decline, the steepest weekly drawdown in roughly 18 months.
The API's Tuesday report stunned a market bracing for a modest build of around 700,000 barrels. Instead, stockpiles fell to 420.3 million barrels for the week ending January 31, snapping a stretch of mixed signals that kept prices range-bound since December.
EIA confirms the trend
Government data from the Energy Information Administration told a similar story with a smaller headline number. The EIA pegged the crude draw at 3.455 million barrels, still well above the consensus forecast for a gain of roughly 489,000 barrels. US crude stocks now sit about 4% below the five-year seasonal average.
The gap between API and EIA figures is normal. API surveys are voluntary and cover a smaller sample set, while the EIA relies on mandatory reporting. Both pointed the same way: supply is tightening.
Distillates tank, gasoline holds
Distillate fuel stocks, diesel and heating oil dropped 5.6 million barrels, one of the largest weekly declines in recent months. Four-week average distillate demand fell 6.2% year over year to 4.0 million barrels per day, suggesting production cuts rather than a consumption surge drove the drawdown.
Gasoline bucked the trend with a modest 700,000-barrel build. Output slipped to 9.0 million barrels per day while four-week demand held at 8.3 million barrels per day.
Across all products, total petroleum inventories fell 25.1 million barrels in a single week.
Behind the numbers
Refinery utilization dipped to 90.5% as maintenance season approaches. Crude inputs averaged 16.0 million barrels per day, down 180,000 from the prior week. Normally, lower processing would build stockpiles, which makes the crude draw stand out even more.
Imports actually rose by 558,000 barrels per day to 6.2 million barrels per day, ruling out a supply shortfall from abroad. That points to either stronger exports or lingering production cuts from the late-January cold snap that knocked out roughly 2 million barrels per day of US output.
Prices steady, bulls take note
WTI crude traded at $63.55 per barrel on Friday, up 0.26% on the session. Brent rose 0.50% to $68.05. Both benchmarks held gains from earlier in the week, supported by US-Iran diplomatic uncertainty and now a clear inventory tailwind.
Stocks 4% below seasonal norms and total petroleum inventories falling at this pace give bulls fresh ammunition. The next EIA report, covering the week ending February 7, drops Wednesday.