Distillate Fuel Supplies Drop to Five-Year Low in Survey

U.S. supplies of crude oil probably fell for the first time in 11 weeks as refineries boosted operating rates and fuel production.

Inventories dropped by 700,000 barrels, or 0.2 percent, to 390.7 million barrels in the seven days ended Nov. 29, based on the median of eight analyst estimates before an Energy Information Administration report on Dec. 4. Six respondents forecast a decline and two projected a gain.

Refineries raised their operating rate to above 90 percent last week for the first time since September, the survey showed. The crude supply rose to the most since June in the prior week as domestic production climbed to more than 8 million barrels a day.

“This report will finally show a drop in crude supplies,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’ll be seeing de-stocking through the year.”

West Texas Intermediate crude futures fell $2.12, or 2.2 percent, to $92.72 a barrel last week on the New York Mercantile Exchange. The contract advanced $1.10, or 1.2 percent, today to $93.82.

The refinery utilization rate increased to 90.1 percent from 89.4 percent the prior week, according to the Bloomberg survey.

Crude inventories advanced to 391.4 million barrels last week as output reached 8.02 million a day, the most since January 1989, according to the EIA, the Energy Department’s statistical arm.

Distillate Fuel

Supplies of distillate fuels, including diesel and heating oil, dropped by 1.15 million barrels, or 1 percent, to 109.7 million last week, the survey showed. That would be the least since May 2008. Six respondents forecast a decline and two projected that supplies were unchanged.

Demand for distillate fuels in the four weeks ended Nov. 22 averaged 4.17 million barrels a day after reaching 4.20 the prior week, the most since November 2011, according to EIA data.

“Demand is the driver of distillate supply,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “I am expecting another draw.”

Ultra-low-sulfur diesel for December delivery increased 0.65 cent, or 0.2 percent, last week to $3.0478 a gallon. It rose 1.93 cents, or 0.6 percent, today to $3.0501.

Gasoline stockpiles probably climbed 1.25 million barrels, or 0.6 percent, to 211.9 million, the survey showed. Seven respondents projected a gain and one said supplies dropped. Futures slid 4.2 cents, or 1.5 percent, to $2.6841 a gallon last week and ended up 0.6 percent at $2.6784 today.

The EIA is scheduled to release its petroleum supply report at 10:30 a.m. on Dec. 4 in Washington.

To contact the reporters on this story: Moming Zhou in New York at mzhou29@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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