Oil stabilised on Wednesday after China’s central bank moved to support the country’s economy, but prices stayed near 6-1/2-year lows as a heavy supply glut kept the market outlook bearish. Gasoline prices spiked earlier this month after the refinery disruptions, although nationwide inventories remain in line or slightly above seasonal norms.
Diesel prices across the U.S. are down 5.4 cents to $2.561, according to the most recent data from the Energy Information Administration (EIA). The refinery utilization rate is calculated as gross inputs to refineries divided by refineries’ operable refining capacity. API said U.S. distillate stocks increased by 1.5 million barrels in the week, according to a source.
EIA added that its updated projection remains subject to “significant uncertainties: the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth, and the responsiveness of non-OPEC production to low oil prices”.
Refinery crude runs, which reached record highs of more than 17 million barrels per day (bpd) earlier in August, fell by 117,000 bpd to their lowest rate since early July amid a wave of unexpected shutdowns.
US crude oil was down 20 cents at $39.11 a barrel by 2.55pm GMT.
“The displacement of high cost supply from the United States is taking much longer than expected, and it’s likely to keep the market substantially oversupplied in the short term”, it said.
The draw in crude stocks had largely been anticipated but the gasoline build had not been factored into prices, analysts and traders said.
Analysts had expected to see a crude oil stocks rise of around 1-million barrels.
Beyond China, other emerging markets such as Russian Federation, Indonesia, Brazil and Thailand were also seeing a slowdown in demand, Macquarie noted.
This was a smaller drawdown than industry data from the American Petroleum Institute showed on Tuesday, which said there had been a crude stockpile decrease of 7.3-million barrels last week to 449.3-million.