US crude oil stockpiles shrink, but product inventories jump further

US crude oil inventories fell by more than was expected last week as net imports dropped, but product stockpiles continued to build rapidly, helped by another leg up in domestic oil production.

According to the Energy Information Administration, the US Department of Energy's statistical arm, commercial crude oil inventories shrank by 2.7m barrels (consensus: -1.3m) over the week ending on 11 January to reach 437.1m barrels.

That put them about 8% above their five-year average for this time of year, the EIA said in a statement.

Gasoline inventories on the other hand jumped by 7.5m barrels, leaving them standing 6% above their corresponding five-year average, while those for distillate fuels increased by 3.0m barrels.

All of the above was despite a 319,000 barrel a day drop in US crude oil imports last week to an average pace of 7.5m b/d, with net imports down by 1.22m b/d to 4.561m b/d, as exports rose by 901,000 b/d to 2.966m b/d.

To take note of, domestic US oil output increased by a further 200,000 b/d over the week and hit 11.9m b/d.

In parallel, refinery operating rates continued to decline, reaching 94.6%.

Stocks in America's Strategic Petroleum Reserve were unchanged for a third week running, possibly on account of the US federal government shutdown, according to Yasemin Engin at Capital Economics.

"[...] The large build in products point to waning demand," Engin said.

"The plunge in crude stocks can be attributed to the drop in net imports [...] Imports from Saudi Arabia plunged, in line with reports that the country was scaling back its exports in an effort to remove the excess supply in the US market.

"As the OPEC cuts kick in this month, imports from Saudi Arabia are likely to fall further."