U.S. commercial crude oil stocks surged 10.949 million barrels to 482.393 million barrels the week ended April 3, U.S. Energy Information Administration (EIA) data showed.While 10.3% less than the 12.208 million-barrel increase reported Tuesday evening by the American Petroleum Institute (API) for the same reporting period
, last week's build was the largest since 2001, according to EIA data.
New York Mercantile Exchange (NYMEX) crude oil futures were already trading in the red Wednesday morning before traders saw the bearish data.
In the wake of the news, the front-month contract fell as low as $51.46 per barrel (/b), down $2.52/b. Prices stabilized, but took another step down in the early afternoon, hovering just below $51.00/b.
Analysts surveyed Monday expected only a 3 million-barrel build.
Daily production in the continental U.S. was estimated to have risen 8,000 barrels per day (b/d) to 8.882 million b/d, resuming a pattern of rising output despite crude oil prices have fallen sharply since last summer.
For the week ended March 27, EIA estimated that crude oil production in the lower 48 United States declined 37,000 b/d - the first weekly drop since January - which sparked speculation that output had peaked and would soon begin falling.
Another factor behind the increase in stocks was imports, which jumped 869,000 b/d to 8.217 million b/d, raising the four-week average to 7.613 million b/d.
By country of origin, imports from Kuwait rose the most, increasing 398,000 b/d to 496,000 b/d. Imports from Venezuela were 335,000 b/d higher at 992,000 b/d. Imports from Canada dropped 358,000 b/d to 2.935 million b/d, helping offset the weekly increase.
Stocks at Cushing, Oklahoma -- delivery point for the NYMEX crude oil futures contract -- increased 1.232 million barrels to 60.175 million barrels.
Cushing has seen net inflows each week since December 5. Traders are taking advantage of later-dated futures contracts being more expensive than near-term delivery, making Cushing storage profitable.
The hub's current storage total stands at 85% of its working capacity, which EIA estimates is equal to 70.812 million barrels.
By region, the U.S. Gulf Coast saw the biggest increase in inventory, with stocks growing 7.766 million barrels to 236.383 million barrels. USGC refinery activity was steady the week ended April 3, with the utilization rate inching up 0.1 percentage point to 91.1% of operable capacity.
The U.S. Midwest (USMW) refinery utilization jumped 2.5 percentage points to 94% of operable capacity, alleviating the size of the crude oil build.
Total U.S. crude oil runs rose 201,000 b/d to 15.929 million b/d, pushing the refinery utilization rate 0.7 percentage point higher to 90.1% of operable capacity.
Analysts expected the refinery utilization rate to increase 0.4 percentage point.
Refinery activity picks up in the spring as winter maintenance ends and ahead of the peak summer driving season.
With crude oil runs close to 16 million b/d, a level not reached in 2014 until the final week of May, refinery demand appears robust, yet still unable to absorb all of the barrels being produced.
Production in the lower 48 United States exceeded the year-ago level by 1.187 million b/d the week ended April 3.
GASOLINE STOCKS RISE
Total U.S. gasoline stocks increased 817,000 barrels the week ended April 3 to 229.945 million barrels, compared with analysts' expectations of a 1.8 million-barrel draw.
The EIA five-year average shows inventories falling 2.12 million barrels in the comparable reporting period, as winter-grade gasoline gets pushed out of the system in preparation for summer-grade material.
Implied gasoline demand* plummeted 825,000 b/d to 8.610 million b/d, albeit one week after having spiked 816,000 b/d.
Distillate stocks decreased 250,000 barrels to 126.924 million barrels, a 3.4% deficit to the EIA five-year average.
Analysts expected a 314,000-barrel increase.
U.S. Atlantic Coast stocks of low- and ultra-low-sulfur diesel (ULSD) increased 1.788 million barrels to 24.227 million barrels, a 1.38% deficit to the EIA five-year average.
The USMW looks better supplied after low- and ULSD stocks rose 447,000 barrels to 33.193 million barrels, a 16.3% surplus to the EIA-five-year average.
* Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.