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By David Gaffen
Jan 5 U.S. crude oil inventories fell sharply as
higher refining runs prompted a surge in gasoline and distillate
stocks in the last week of 2016, the Energy Information
Administration said on Thursday.
Crude inventories fell 7.1 million barrels in
the week to Dec. 30, much more than analysts' expectations for a
decrease of 2.2 million barrels.
Some of the drawdown, analysts said, is attributable to
year-end tax considerations, as refiners use up crude that is on
hand to avoid facing higher taxes for larger inventories.
"The large crude draw can entirely be explained away by the
7.1 million-barrel draw to Gulf coast inventories, as tax
mitigation strategies meant crude cargoes remained offshore,
rather than being brought onshore, where they would be taxed,"
said Matt Smith, director of commodity research at ClipperData
in Louisville, Kentucky.
U.S. crude imports fell last week by 1 million
barrels per day.
Refinery crude runs rose 132,000 bpd as
utilization rates gained 1 percentage point at 92
percent of total capacity.
The increase in refinery output was concentrated in the U.S.
Gulf Coast region, resulting in the largest weekly build in U.S.
distillate inventories on record, according to the EIA.
Overall, distillate stockpiles, which include
diesel and heating oil, soared 10.1 million barrels, versus
expectations for a 1.1 million-barrel increase, the EIA data
showed. That included a build of 5.8 million barrels in PADD 3,
the Gulf Coast region.
"To have this kind of swing in one-week inventory ... has to
do with the calendar. Yes, there was warm weather and yes,
production is up, but a lot of it has to do with the calendar
year consideration, tax considerations," said Donald Morton, who
runs an energy trading desk at Herbert J. Sims & Co, an
investment banking firm in Fairfield, Connecticut.
Gasoline stocks rose 8.3 million barrels,
compared with analyst expectations in a Reuters poll for a 1.8
Oil futures turned negative after the data release. U.S.
crude was down 27 cents, or 0.6 percent, at $52.95 a
barrel, down from an earlier high of $54.12 while Brent
was off by 31 cents at $56.15.
Crude stocks at the Cushing, Oklahoma, delivery hub for
futures rose by 1.1 million barrels, the EIA said.
(Reporting By David Gaffen; additional reporting by Scott
DiSavino and Ethan Lou; Editing by Marguerita Choy)