US crude stocks rose by 3.6 million barrels last week, much higher than analysts’ expectations of an increase of 769,000 barrels.  Bloomberg photo by David Acker.

US crude stocks up by 3.6 million barrels last week

US crude stocks rose for the 10th straight week, according to data from the US Energy Information Administration.

The 3.6 million barrel increase last week came at a time when refineries are increasing their output and US crude exports are on the rise.  Analysts polled prior to the data release had anticipated an increase of only 769,000 barrels.

In September, US crude stocks hit two-and-a-half year lows, but have since risen by 14 per cent.  According to the EIA, this is the longest run of inventory increases since the autumn of 2015.

“This report does not paint a supportive picture for the market,” Gene McGillian, vice president of market research for Tradition Energy told Reuters. “I think now we’ve added more than 50 million barrels to U.S. crude stocks in the last three months.”

Not including the US Strategic Petroleum Reserve (SPR), US crude stocks now sit at 450 million barrels, the highest in a year.  Reuters reports that SPR stocks dropped by 2 million barrels last week, however, it is not known if those barrels were shifted to commercial storage or process by refiners.

US crude stockpiles climbed even though production in the United States held steady at 11.7 million barrels per day (b/d).  US crude exports rose to 473,000 b/d to 2.4 million b/d, but was likely offset by an increase in crude imports which rose to 8.2 million b/d.

Net US crude imports rose by 135,000 b/d.

Distillate inventories, which include diesel and heating oil, rose by 2.6 million barrels.  Analysts had forecast a decline of 857,000 barrels.  As a result, US ultra low sulphur diesel futures fell by over 2 per cent.

The EIA reported that gasoline stockpiles fell by 764,000 barrels.

But, Matt Smith, director of commodity research at ClipperData told Reuters that the Thanksgiving holiday week can produce anomalies with weekly inventory figures.

Following the release of the IEA data oil prices fell.  By 1:29 p.m., EST, Brent crude fell 18 cents to $60.22/barrel and US West Texas Intermediate was down 19 cents to $51.37/barrel.