NEW YORK (Reuters) - U.S. crude stocks fell unexpectedly last week as refineries hiked output, the Energy Information Administration said on Wednesday.
Crude inventories fell by 4.6 million barrels in the last week, compared with analysts’ expectations for an increase of 246,000 barrels.
Oil prices pared losses sharply on the data, recovering marginally from a two-week low.
Brent crude was down 40 cents or 0.6 percent at $67.72 a barrel by 10:59 a.m. EDT (1459 GMT). U.S. crude was down 42 cents or 0.7 percent at $63.09 a barrel. [O/R]
The drop in inventories came as refinery crude runs rose by 141,000 barrels per day, EIA data showed. Refinery utilization rates rose by 0.7 percentage point.
U.S. refiners are beginning to restart units after seasonal maintenance work ahead of the high demand summer months.
“The damage has been done on the Gulf Coast, where rocketing refinery runs - hark, above 9.1 million barrels per day - and low net imports have drawn down oil inventories by 7 million barrels,” said Matt Smith, director of commodity research at ClipperData.
Oil inventories on the Gulf Coast are now 21 percent below year-ago levels, Smith said.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 3.7 million barrels, EIA said.
U.S. crude production continued to surge, hitting a new weekly record of 10.46 million barrels per day (bpd) compared with 10.433 million bpd last week.
“There are larger issues at work that are going to overshadow any periodic drawdowns, and the bottom line is we have record output ... So that basically means that if we don’t export enough, prices are going to absolutely collapse,” said Walter Zimmerman, chief technical analyst at United-ICAP.
Gasoline stocks fell by 1.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.3 million barrels drop.
Distillate stockpiles, which include diesel and heating oil, rose by 537,000 barrels, versus expectations for a 1.1 million barrels drop, the EIA data showed.
Net U.S. crude imports fell last week by 847,000 barrels per day.
Exports climbed above 2 million barrels per day as a second supertanker laden with U.S. crude set sail from the Louisiana Offshore Oil Port (LOOP), the largest privately-owned crude terminal in the United States.
Reporting by Devika Krishna Kumar in New York; Additional reporting by Ayenat Mersie; Editing by Chizu Nomiyama