U.S. crude stocks fall, but demand also drops as prices rise -EIA

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Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that has hammered prices, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo/File Photo

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March 30 (Reuters) - U.S. commercial crude stocks and the country's strategic reserves both fell in the most recent week as refiners ramped up output amid global supply tightness, the Energy Information Administration said on Wednesday.

However, demand for both distillates and gasoline fell in the latest week, which could signal that high prices are starting to put a dent in fuel consumption.

Crude inventories (USOILC=ECI) fell by 3.4 million barrels in the week to March 25 to 410 million barrels, lowest since September 2018. The decline was much steeper than the 1 million-barrel drop that analysts had forecast in a Reuters poll.

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The nation's strategic reserve also dropped by 3 million barrels following announced sales meant to shore up worldwide supplies since Russia's invasion of Ukraine. Oil prices have surged as buyers have shunned oil from Russia, the second-largest crude exporter behind Saudi Arabia.

Refineries bumped up crude processing (USOICR=ECI) by 35,000 barrels per day in the latest week, lifting overall utilization (USOIRU=ECI) by 1% to 92.1%. U.S. Gulf refinery processing rates rose to 95.6%, highest since just before the coronavirus pandemic started in January 2020.

Fuel inventories rose, as implied demand, based on product supplied figures, dropped across the board. Distillate product supplied fell by 16% in the latest week, though the data is volatile, and gasoline demand was down 1.6% from the previous week. On a four-week moving average basis, distillate and gasoline demand is down 3.7% and 0.7%, respectively.

"Healthy profit margins appear to be driving an upturn in refinery activity. That said, high product prices are also taking their toll on consumer demand, which may force refineries to reduce operating rates in the weeks ahead," said Kieran Clancy, commodities economist at Capital Economics.

U.S. gasoline stocks (USOILG=ECI) rose by 785,000 barrels in the week to 238.8 million barrels; analysts had expected a 1.7 million-barrel drop. Distillate stockpiles (USOILD=ECI), which include diesel and heating oil, rose by 1.4 million barrels in the week to 113.5 million barrels.

Crude futures were higher on the day. Brent gained $2.60, or 2.4%, to $112.83 a barrel while U.S. crude rose $2.83, or 2.7%, to $107.07 as of 1:46 p.m. EDT (1746 GMT).

U.S. production rose modestly to 11.7 million bpd, the first increase in output in two months. World oil supplies have been tightening, with more crude coming out of storage, as output has lagged rising demand.

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Reporting By David Gaffen; Editing by David Gregorio

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