By Kim Khan
Investing.com – Stockpiles of U.S. crude climbed much more than expected last week, the Energy Information Administration reported Wednesday, indicated that Covid-19-related demand destruction is being reflected in inventories.
WTI futures rose 0.7%, reversing earlier losses.
Oil inventories rose by 13.8 million barrels for the week ended March 27, the EIA said. That compared with expectations for a build of about 4 million barrels, according to forecasts compiled by Investing.com.
That was the biggest build in three years, when February 2017 also saw a build of 13.8 million barrels.
“Covid-19’s impact on refineries is finally showing, with runs at just over 82% of capacity, way below norm for this time of year,” Investing.com analyst Barani Krishnan said.
“So, while the three-year high in crude builds might be shocking, it isn’t entirely surprising given the sheer immobility of the U.S. motoring and commuting public now,” Krishan said. “It’s also well reflected in last week’s drop in gasoline production to 7.5 million bpd.”
Gasoline inventories surged by 7.5 million barrels, versus forecasts for a rise of about 1.95 million barrels. Distillate stockpiles unexpectedly fell by 2.2 million barrels, compared with expectations for a build of about 1.03 million barrels.
“Interestingly, distillate fuel production rose by 5 million bpd in contrast,” Krishnan added. “In the most simplistic interpretation, that underscores the ramp-up in trucking and transportation related activity as e-commerce and courier companies from Amazon (NASDAQ:AMZN) to UPS (NYSE:UPS) and FedEx (NYSE:FDX) race round the clock to fulfill orders that have stretched them to max.”
“Production meanwhile remains near an all-time high of 13 million barrels, proving that the impact on shale output hasn’t really set in yet by EIA estimates.”
Oil Inventories Jumped by 13.8M Barrels Last Week: EIA
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