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Oil falls after US reports inventory gain of more than 8 million barrels

HOUSTON, January 27, 2016 (PCW) -- NYMEX crude futures fell Wednesday after government figures showed a huge build in crude and gasoline inventories. The US is now very long in crude, gasoline and diesel, with demand also faltering.

As of 9:49 am CST, March NYMEX WTI was down $0.34/bbl to $31.11/bbl, March gasoline was down 4.03 cpg to 102.82 cpg and February diesel was up 1.68 cpg to 99.81 cpg.

The US Energy Information Administration's weekly statistics for the week ending January 22 showed an 8.4 million barrel increase in crude inventories to 494.9 million barrels. Domestic crude oil production was put at 9.221 million b/d, down 14,000 b/d for the week, but still up 8,000 b/d vs the same period last year.

Crude production in the US is off its highs seen in the summer, but has not fallen dramatically as some had hoped. Perhaps this production decrease could mean the beginning of lower crude inventories.

Imports of crude were down 170,000 b/d, to 7.6 million b/d. Over the past four weeks, crude imports were 7.8 million b/d compared with the same period last year, an increase of 7.2%.

Total product demand over the past four weeks was put at 19.5 million b/d, down 1.7% versus the same period last year. US refinery inputs were 15.6 million b/d, down 551,000 b/d.

Gasoline inventories were up 3.5 million barrels, to 248.5 million barrels (“well above the upper limit of the average range,” per the EIA). Demand was 8.7 million b/d over the past four weeks, down 2.5% from the same period last year.

Distillate stocks were down 4.1 million barrels, to 160.5 million (still “near the upper limit of the average range,” according to the EIA). Distillate demand over the past four weeks was down 14.8% to 3.4 million b/d compared to the same period last year.

Inputs of crude oil nationwide to refineries on a percentage basis were lower by 3.2% on the week, put at 87.4 % of capacity, which is a significant fall. In the Gulf Coast (PADD III), runs were down 3.9% to 83.5% also a very low number.

Net exports of all products were put at 1.566 million b/d, down 14,000 b/d for the week, a number that again reflects the recent relative weakness of Brent vs WTI, again suggesting foreign refiners may have an edge over US refiners in competing for export business. -- Robert Sharp