U.S. crude, fuel stockpiles drop sharply amid hurricane: EIA

(Reuters) – U.S. crude stockpiles fell sharply last week, as offshore oil production was shut due to Hurricane Delta, while distillate inventories posted their biggest drop since 2003 as refiners shut as well, the Energy Information Administration said on Thursday.

Crude inventories USOILC=ECI fell by 3.8 million barrels in the week to Oct. 9 to 489.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.8 million-barrel drop.

Crude production fell on the week by 500,000 barrels per day to 10.5 million bpd, as most of the nation’s offshore production was closed due to the hurricane.

Distillate stockpiles USOILD=ECI, which include diesel and heating oil, dropped by 7.2 million barrels in the week, versus expectations for a 2.1 million-barrel drop.

In the Gulf Coast region where Delta made landfall, distillate inventories fell by a record 5.5 million barrels, according to the data.

“This is a hurricane report so it’s skewed all over the place. The distillate is the biggest takeaway, but a lot of refineries were shut in so that shouldn’t come as a huge surprise,” said Bob Yawger, director of energy futures at Mizuho.

Oil futures tempered some losses, but were still lower on the day. U.S. crude CLc1 fell 81 cents, or 2%, to $40.23 a barrel. Brent LCOc1 dropped 79 cents to $42.53 a barrel as of 11:22 a.m. ET (1522 GMT).

Refining output slowed last week, which would spur a rundown in existing inventories.

Refinery crude runs USOICR=ECI fell by 276,000 bpd, while refinery utilization rates USOIRU=ECI dropped by 2 percentage points to 75.1%.

Gasoline stocks USOILG=ECI fell by 1.6 million barrels, the EIA said, in line with expectations.

Product supplied, a proxy for demand, was once again lackluster, with overall demand for gasoline declining.

Over the past four weeks, refiners have supplied 7.5% less product than at the same time a year ago, and with numerous states seeing a rise in coronavirus infections, fuel demand may remain weak.