U.S. crude supplies probably rose last week as production increased and imports rebounded, threatening to erode prices after their biggest gain since April, a Bloomberg survey showed.
Stockpiles increased 550,000 barrels to 391.8 million on June 7, based on the median of eight analyst estimates before an Energy Information Administration report tomorrow. Five respondents forecast a gain and three a decrease. Inventories surged to 397.6 million on May 24, the most since 1931.
U.S. domestic crude production reached a 21-year high in early May and exceeded imports in the week ended May 31 for the first time in 16 years, according to the EIA. Five analysts said they expect imports to rise after the prior week’s 7 percent drop, the biggest since March 1. The four-week average of gasoline demand was at a 12-year low for this time of year.
“Production in the U.S. is still very high and imports should rebound,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Demand is still not strong enough. We should see a build in supply, which would put downward pressure on prices going forward.”
West Texas Intermediate crude for July delivery rallied $4.06, or 4.4 percent, to $96.03 a barrel on the New York Mercantile Exchange in the five days ended June 7, the biggest gain since April 26. The contract was at $95.57 today. Futures are up 4.1 percent this year.
The U.S. pumped 7.3 million barrels a day of oil in the week ended May 31, according to data from the EIA, the Energy Department’s statistical arm. Imports were 7.27 million. Production had been lower than international purchases since January 1997.
Output rose to 7.37 million barrels a day in the week ended May 3, the most since February 1992.
“Production just keeps on coming,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “I am expecting a rebound from last week’s big draw as imports rebound a bit.”
Imports fell 549,000 barrels a day in the week ended May 31, reaching the lowest level since Dec. 28. The drop helped reduce crude inventories by 6.27 million barrels to 391.3 million, the biggest decrease since December.
Also expecting imports to rise were Tim Evans, an energy analyst at Citi Futures Perspective in New York; Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC; and Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
“Imports should go up a little bit,” Finlon said. “Demand is going to stay wishy-washy. As a consequence, crude inventories will build.”
A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies in shale formations in states including North Dakota, Oklahoma and Texas. North Dakota output rose 58 percent in 2012, federal data showed.
Rising oil production helped the U.S. meet 88 percent of its own energy needs in February, the highest rate since April 1986, according to the EIA. Production has climbed 42 percent over the past five years.
Higher production came as consumption remained below seasonal norms. Gasoline demand averaged 8.73 million barrels a day in the four weeks ended May 31, down 0.8 percent from a year earlier and the lowest level for the end of May since 2001.
“It’s not going to be bullish if demand continues to lag behind year-ago levels,” Evans said.
The median estimate showed that the refinery utilization rate rose to 88.7 percent from 88.4 percent.
Philadelphia Energy Solutions started a unit at the Girard Point section of its 355,000-barrel-a-day Philadelphia refinery on June 7 after exchanger repairs, according to filing with city regulators. The unit was shut for the scheduled work June 1.
Marathon Petroleum Corp. (MPC:US)’s Catlettsburg, Kentucky, refinery restarted crude unit No. 5 on May 29 after it shut May 24, Jonathan Barker, environmental inspector for state Environmental Protection Department, said by e-mail. The plant has a capacity of 240,000 barrels a day.
Gasoline stockpiles probably increased 500,000 barrels, or 0.2 percent, to 219.3 million, the survey showed. Five respondents projected a gain and three a drop.
Regular gasoline at the pump, averaged nationwide, gained 0.3 cent to $3.635 a gallon on June 9, according to Heathrow, Florida-based AAA, the largest U.S. motoring group.
Inventories of distillate fuel, a category that includes heating oil and diesel, probably climbed 900,000 barrels, or 0.7 percent, to 124.2 million last week, the survey showed. Seven analysts projected a gain and one forecast a drop.
The EIA is scheduled to release its weekly petroleum report at 10:30 a.m. tomorrow in Washington.
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