By Edward Welsch
U.S. refineries used the most crude in almost eight years last week, draining supplies for the third straight time even as domestic production rose the highest level since 1990 and imports increased.
Refinery crude oil inputs reached 16.2 million barrels a day during the week of July 12, the highest level since August 2005, the Energy Information Administration said today. Domestic production plus imports totaled 15.2 million barrels a day, and 6.9 million barrels were withdrawn from storage, sending stockpiles to their lowest level since January.
“The import number is actually too low, it’s still not enough to keep stocks from drawing,” said Andrew Lebow, senior vice president of Jefferies Bache LLC in New York. “We really need about a million barrels a day more imports.”
Rising output from oilfields including North Dakota’s Bakken shale and the Eagle Ford in Texas pushed U.S. oil production up 1.2 percent to 7.49 million barrels a day, the highest level since December 1990. Imports increased 2.4 percent from the previous week to 7.71 million barrels a day.
That wasn’t enough to satisfy a surge in demand for crude amid a temporary shortage in supply because of flooding in Canada, the U.S.’s largest source of imported oil. Stockpiles have dropped 27.1 million barrels in three weeks to 367 million.
“The Midwest is short crude following Canada flooding and refinery restarts,” Morgan Stanley analyst Adam Longson said in a note to clients this week. “Canada is slowly returning and the pace of draws should slow as early as next week.”
Refinery utilization rates increased by 0.4 percentage point to 92.8 percent, the EIA said. That’s the highest level in almost a year.
The restart this summer of the largest crude unit at BP Plc’s Whiting, Indiana, refinery and Exxon Mobil Corp.’s plant in Joliet, Illinois, has added to demand, Lebow said. Chevron’s plant in Richmond, California, and Motiva Enterprises LLC’s Port Arthur, Texas, refinery “were down for a long time last year, so now they are back and running and they want to recoup some of those lost profits,” he said.
Canada’s largest oil producer, Suncor Energy Inc., said yesterday it had returned to full production following the restart of Enbridge Inc. pipelines in Alberta, which were shut down June 22 amid record flooding in the province.
West Texas Intermediate futures rose 20 cents to $106.20 a barrel at 2:22 p.m. on the New York Mercantile Exchange. The price is up 16 percent this year.