Investing.com – Oil prices rose on Thursday as traders looked beyond a whopping jump in weekly U.S. crude inventories to focus on plummeting fuel stockpiles as the maintenance season for refineries caused an unusual deficit in oil products.
U.S. West Texas Intermediate crude settled up 57 cents, or 1%, at $53.93 per barrel.
U.K. Brent oil closed up 49 cents, or 0.8%, at $59.91.
An easing of geopolitical tensions in the Middle East also didn't keep oil down. Turkey has agreed to a five-day ceasefire in northeast Syria to allow for withdrawal of Kurdish forces, U.S. Vice President Mike Pence said after talks with Turkish President Tayyip Erdogan on Thursday.
U.S. oil inventories soared for the latest week, rising much more than the market was expecting, the Energy Information Administration said.
Crude stockpiles jumped 9.3 million barrels last week, the EIA said. That compared to analysts’ expectations for a rise of about 2.9 million barrels, according to forecasts compiled by Investing.com.
But Gasoline inventories fell by 2.56 million barrels, versus expectations for a drawdown of about 1.21 million barrels. Distillate inventories fell by 3.8 million barrels, with analysts predicting a decline of about 2.4 million barrels.
The decline in fuel stockpiles came after refinery runs fell to just over 83% last week, one of the lowest in years after the peak summer driving season. Refiners typically wind down operations during the fall season to do plant repairs or upgrades. This year, many refineries are taking longer to return to ensure compatibility with new maritime fuel rules, dubbed IMO, taking effect in 2020.
“Refiners are really socking the oil bulls with their maintenance and it’s telling with this humongous crude build, which is more than triple last week’s,” Investing.com analyst Barani Krishnan said.
“There’s continuous talk that the new IMO rules for maritime fuels is behind this drawdown in distillates and we’ll see how accurate that is when the refiners finally come out their maintenance,” he added.
John Kilduff, founding partner at New York energy hedge fund Again Capital, said the 83% refinery run rate was “a super-low rate, even for a post-driving season, that I haven’t seen in years.”
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