US OIL INVENTORIES: Crude Stocks Rise While Refineries Cut Runs

[Purveyor]

NEW YORK -(Dow Jones)- U.S. crude inventories unexpectedly rose last week while product stocks fell as already-low refinery runs dropped further, according to data released Wednesday by the U.S. Department of Energy.

Crude oil stockpiles rose by 2.3 million barrels to 328.99 million barrels for the week ended Jan. 29, compared with an average survey estimate that inventories would remain steady with prior-week levels. Tuesday afternoon, American Petroleum Institute, an industry group, reported a 4.7-million barrel increase.

The rise in crude stocks bucked expectations after experiencing sharp draws the prior week. No crude builds were expected last week after a tanker accident in the Sabines-Neches Waterway in Texas resulted in an oil spill of 11,000 barrels of oil and limited supplies to nearby refineries for much of the week. Refinery operating rates declined further, pushing to a new historic low for this time of the year, according to EIA data. Although stocks of petroleum products such as gasoline and diesel, they too remain at abnormally high levels.

Refineries continue to struggle with the problem of excess supply and too- little demand. The recovery is expected to be slow. This morning, Tesoro Corp. ( TSO) Chief Executive Bruce Smith said that he expects margins for this year to continue to hover around depressed 2009 levels. The bleak outlook has been mirrored across refinery operators in the U.S. Higher fuel efficiency standards and biofuel blending in gasoline at a time when new refining capacity is coming online overseas will continue to be a drag on margins.

Gasoline stockpiles dropped by 1.3 million barrels to 228.12 million barrels, the department's Energy Information Administration said in its weekly report, compared with the 1-million barrel increase forecasted in a Dow Jones Newswires survey of 14 analysts.

Distillate stocks, which include heating oil and diesel fuel, fell by 948,000 barrels to 156.55 million barrels, compared with analysts' expectation of an 800,000-barrel decline.

Refining capacity utilization slipped 0.8 percentage point to 77.7%. Lower utilization rates were only reported from hurricane-related outages in 2005 and 2008. Analysts had expected last week's rates to hold steady at 78.5%.

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