EIA: Cushing Crude Stocks fall to Decade-low levels

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U.S. crude stocks fell last week, driving the Cushing, Oklahoma hub to a 10-year low, while fuel inventories surged, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 959,000 barrels to 414.6 million barrels in the week ended Jan. 3, the EIA said, compared with analysts' expectations in a Reuters poll for a 184,000-barrel draw.

Brent and U.S. crude futures extended losses following the report. "A ramp-up in refinery maintenance in the coming weeks should usher in a return to crude inventory builds," said Matt Smith, analyst at Kpler.

"There's going to be a semi aggressive turnaround season this year with a lot of work being done on a lot of refineries," said Bob Yawger, director of energy futures at Mizuho in New York.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.5 million barrels to their lowest since October 2014, and also showed their biggest weekly decline since August 2023.

"These guys like to drain the tanks at the end of the year, for tax reasons, but this is extreme, so it's definitely an issue," Mizuho's Yawger said, adding that it is difficult to move barrels out of the facility when the tanks get too low.

Tank storage at Cushing of below 20 million barrels, or between 10% and 20% of the hub's over 98 million barrels of capacity, is considered close to operational low, according to traders traders.

When inventories drop below those levels, the oil can become difficult to remove. Still, Cushing stocks are expected to start replenishing with the tax season over, Yawger added.

FUEL STOCKS SURGE
Refinery crude runs rose by 45,000 barrels per day (bpd) last week, while utilization rates rose by 0.6 percentage points in the week to 93.3%, the EIA said. Refiners along the U.S. Gulf Coast raised their crude oil net inputs to the highest levels since December 2018, the data showed.

The four-week average for refinery utilization is at 92.6%, slightly below year-ago levels of 92.9%. U.S. gasoline stocks rose by 6.3 million barrels in the week to 237.7 million barrels, the EIA said, compared with analysts' expectations for a 1.5 million-barrel build.

U.S. gasoline futures fell after the data showed a large build in products. Distillate stockpiles, which include diesel and heating oil, rose by 6.1 million barrels in the week to 128.9 million barrels, versus expectations for a 600,000-barrel rise, the EIA data showed.

U.S. heating oil futures extended losses after the larger-than-expected build in distillate stocks. "I would be concerned if we saw more substantial products builds over the next few weeks. And in the meantime, the cold snap could constrain crude oil supply and increase heating oil demand," said Josh Young, chief investment officer at Bison Interests.

Net U.S. crude imports USOICI=ECI rose last week by 278,000 bpd to 3.35 million bpd, the EIA said. Shipments from Canada surged last week to a record high amid concerns that President-elect Donald Trump will implement tariffs on imports when he takes office later this month.