Analysis: EIA Data Shows More Crude Build on Refiner Cuts

VIENNA (DTN) – Refiners entering a delayed maintenance season could put more downside pressure in the near term on demand for U.S. crude oil, which has already seen three straight weeks of stockpile builds, data from the Energy Information Administration indicates.

U.S. commercial crude oil inventories grew by 3.5 million bbl to 423.8 million bbl for the week ended October 10, after two prior weekly builds of 3.7 million bpd and 1.8 million bpd, the EIA’s latest supply-demand report on oil revealed Thursday (10/16).

The three-week build puts crude inventories up 0.8% year-on-year and around 4% below the five-year seasonal average.

Crude oil throughput itself –- function of refinery runs — slumped by 1.167 million bpd to a 22-month low 15.13 million bpd for the week ending October 10.

While not unusual for this time of year, the steep and sudden drop was in part a result of refiners just beginning scheduled maintenance after delaying it as much as possible over the past few weeks to take advantage of high refining margins.

In fact, refining operations had outpaced year-ago levels throughout the third quarter, propelled by the highest crack spreads since the first quarter of 2023. That had led to a doubling of refining margins for gasoline and diesel year-on-year, according to EIA’s latest short-term energy outlook.

Consequently, net crude oil inputs have over the past four weeks averaged 16.02 million bpd, some 171,000 bpd, or 1.1%, more than in the same period last year.

But slower runs could put more downside pressure in the near term on refiner demand for crude oil.

On the cumulative daily average, crude oil throughput was up 186,000 bpd, or 1.2%, year-on-year, despite a 166,000-bpd year-on-year decline in operable capacity.

The drop in crude oil runs was most pronounced in the Midwest and on the U.S. Gulf Coast. In PADD 3, net crude oil inputs slumped 552,000 bpd, or 6.3%, week-on-week to their lowest level since February. In PADD 2, they slid 393,000 bpd, or 9.9%, from the prior week.

The inventory build for the week ended October 10 was mitigated somewhat by a 876,000-bpd jump in exports and an identical drop in weekly imports. The Brent-WTI spread has been widening since early July, with WTI in late September trading at its largest discount to Brent since the end of April. U.S. crude exports typically rise in reaction to a widening of the spread with a four-week delay.