Crude Oil’s Gain Tempered by Increase in U.S. Gasoline Supplies

Weekly U.S. Crude Investories Decline

Oil rose to the highest level since December after U.S. crude stockpiles dropped for the first time in four months, though gains were limited by an increase in gasoline supplies.

Crude supplies slipped 3.88 million barrels last week, according to the Energy Information Administration. Refineries operated at the highest rate in four months as imports slipped to a one-year low. Futures dropped from session highs as the increase in gasoline inventories signaled weaker demand going into summer.

Oil has recovered from a six-year low in March as U.S. drillers reduced the number of active rigs to the fewest since September 2010, bolstering speculation that output will slow. The rally may still falter, with stockpiles near the highest level in 85 years and shale-oil producers including EOG Resources Inc. preparing to boost drilling as prices rebound.

“U.S. crude stocks are finally down,” Mike Wittner, head of oil research at Societe Generale SA in New York, said by phone. “Refinery runs are increasingly strong, which is to be expected, while crude production has plateaued. We’re seeing evidence of a rebalancing of the U.S. and global markets.”

West Texas Intermediate for June delivery rose 53 cents, or 0.9 percent, to close at $60.93 a barrel on the New York Mercantile Exchange. It was the highest settlement since Dec. 10. The volume of all futures traded was 15 percent above the 100-day average at 2:36 p.m.

December High

Brent for June settlement rose 25 cents to end at $67.77 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since Dec. 5. The European benchmark crude closed at a $6.84 premium to WTI.

Crude stockpiles had expanded for 16 weeks through April 24 to 490.9 million barrels, EIA data show. That was the highest level since 1930, based on monthly records dating back to 1920.

U.S. crude production decreased by 4,000 barrels a day to 9.369 million. Output reached 9.42 million barrels a day in the week ended March 20, the most in more than three decades.

Drillers seeking oil in the U.S. cut the number of active machines by 24 to 679 in the week ended May 1, according to Baker Hughes Inc., an oil-services company. The rig count has slid 57 percent since the start of December.

“We’re looking forward to the 22nd week of rig cuts, which is going to give us support,” James Leeney, an oil market strategist at Long Leaf Trading Group Inc. in Chicago, said by phone. “Pushing through $60 yesterday was important. That now becomes technical support.”

Reduced Arrivals

Imports of crude tumbled 905,000 barrels a day to 6.54 million last week, the lowest level since May 2014. Fuel imports dropped 995,000 barrels to 1.54 million, the least since November.

“The number is less bullish than the headline will suggest,” Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA in London, said by phone. “It was motivated by an unusual decline in imports that can easily reverse next week.”

Inventories of crude at Cushing, Oklahoma, the delivery point for WTI traded in New York, fell 12,000 barrels to 61.7 million, the second straight drop.

“A lot of what was in the report was already built in,” Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone. “Cushing supplies were largely unchanged in the face of a nearly 2 percent climb in refinery runs. That’s not much of a reaction.”

Gasoline, Diesel

Refineries operated at 93 percent of their capacity, up from 91.3 percent the previous week.

Stockpiles of gasoline climbed 401,000 barrels to 227.9 million. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1.5 million to 130.8 million.

“We’ve come off the day’s highs because a lot of the draw in crude supply went into the distillate build,” Leeney said.

Gasoline futures for June delivery decreased 2.68 cents, or 1.3 percent, to settle at $2.0366 a gallon in New York. Volume was up 68 percent from the 100-day average. June ultra low sulfur diesel increased 0.16 cent to settle at $2.0161 a gallon.