U.S. crude oil inventories rose last week as refinery utilization rates fell amid weakening fuel demand, data from the Energy Information Administration showed on Wednesday.
Crude inventories rose by 3.9 million barrels to 417 million barrels in the week ended Sept. 27, the EIA said.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 840,000 barrels.
“As we descend into seasonal refinery maintenance, a chunky drop in refining activity has ushered in a build to crude inventories,” said Matt Smith, analyst at ship tracking firm Kpler.
Global Brent and U.S. crude futures pared gains following the report to up a little over 2%. They had been up by 3% earlier in the day.
Refinery crude runs fell by 662,000 barrels per day, while refinery utilization rates fell by 3.3 percentage points in the week to 87.6%, the EIA said. Many refiners begin seasonal maintenance after the summer driving season ends.
“It’s a big pullback in the refinery utilization rate. Right there is the vast majority of your build,” said Bob Yawger, director of oil futures at Mizuho in New York.
“Those barrels get stuffed into storage,” he added.
Meanwhile, U.S. gasoline stocks rose by 1.1 million barrels in the week to 221 million barrels, the EIA said.
Gasoline product supplied, a proxy for demand, fell on the week to 8.5 million bpd, down from 9.2 million bpd. Meanwhile distillates supplied fell 3.6 million bpd, from 4 million bpd last week.
“The bottom just fell out of summer gasoline demand, and there was a decent sized drop in distillate fuel demand too,” said John Kilduff, partner at Again Capital
Distillate stockpiles, which include diesel and heating oil, fell by 1.3 million barrels in the week to 122 million barrels.
Net U.S. crude imports rose last week by 191,000 barrels per day, EIA said.
(Reporting by Georgina McCartney in Houston; Editing by Jan Harvey)