U.S. crude oil stocks declined unexpectedly last week and distillate inventories fell more steeply than forecast, government datashowed on Wednesday.
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Domestic stocks of crude dropped by 482,000 barrels in the week to Sept. 28, the Energy Information Administration reported, despite an increase in imports.
Analysts polled by Reuters ahead of the data release had forecast a stock gain of 1.5 million barrels.
Despite an increase in imports of crude oil, which were up 511,000 barrels per day during the week, overall foreign supplies were just over 8 million bpd.
Domestic crude oil production topped 6.2 million bpd last week, the highest level since Dec. 1996, the EIA data showed.
U.S. crude oil prices, already lower due to ongoing concerns about demand, traded down after the data was released. It was down $3.22 at $88.67 a barrel at 11:02 a.m. EDT ( 1502 GMT).
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"The small decline in crude oil inventories actually adds to the bearishness of the report given low level of imports for the second week in a row," said John Kilduff, partner at Again Capital LLC in New York.
"Also, refined product demand persists in being poor, reflective of the overall economy."
Demand in the world's largest consumer continued to drop, with gasoline use over the four weeks to Sept. 28 down 2.5 percent from year-earlier levels while distillate demand was off 4.5 percent. On a weekly basis, however, analysts noted the EIA data showed distillate demand climbed above 4 million bpd last week, the highest weekly level since December 2011.
As the focus of the oil market shifted away from gasoline demand toward winter heating oil consumption, U.S. distillate stocks, which include diesel and heating oil, fell by 3.69 million barrels in the week, well above analysts' average forecast for a decline of 400,000 barrels. It was the largest weekly decline in U.S. distillate inventories since April 2012.
The Midwest region showed the biggest decline in distillate inventories, off 1.87 million barrels, while Gulf Coast stocks fell by 1.67 million barrels.
Stockpiles of the fuel on the East Coast, home to the world's largest heating oil market, fell by 410,000 barrels, with Central Atlantic stocks of distillates off 929,000 barrels.
Overall U.S. distillate stockpiles for the week to Sept. 28 were down nearly 33 million barrels below levels seen for the same period in 2011, according to Reuters calculations from the EIA weekly data, and off almost 28 million barrels from the five-year average for the period.
"Refiners have yet to ramp back up over 90 percent of capacity, which signals there is room to easily add to productive capacity, as we get into the peak distillate demand period for trucking, ahead of the holiday shopping season, and heating demand," said Kilduff of Again Capital.
U.S. gasoline inventories rose by 114,000 barrels, against expectations of a 600,000-barrels draw. Refinery utilization increased by 0.8 percentage point to 88.2 percent of capacity, after analysts had forecast a decline in plant utilization of 0.1 percentage point.