The Energy Information Administration (EIA), which is responsible for the U.S. government's energy policy, announced on Wednesday that U.S. gasoline inventories fell to their lowest level in two years last week due to increased demand. Crude oil stocks also showed a surprising decline as imports declined.

The gasoline stocks dropped by 2.7m barrels to 210.9m barrels during the week ended October 25. This is their lowest level since November 2021. In a poll, analysts had predicted a 600,000.0-barrel increase.

The gasoline supply, which is a proxy for the demand, increased to 9.2 millions barrels per day, up from 8.8 million barrels a week ago. This was its highest level since last week's week-end.

It looks like we're back to the counter-seasonal draw. Josh Young, Chief Investment Officer at Bison Interests, said that this shows a healthier demand and fewer robust supplies than the consensus expectations.

If these inventory decreases continue, oil price may rise and OPEC+ could return barrels to market.

U.S. gasoline and Brent crude futures both gained after the data.

The EIA reported that crude stocks dropped by 515,000 barrels and now stand at 425.5 million barrels. Analysts had expected a rise of 2.3 million barrels.

Crude oil stocks at Cushing, Oklahoma's delivery hub, rose by 681,000 bbls.

Exports increased by 149,000 bpd.

Last week, imports of crude oil to Saudi Arabia dropped to their lowest level since January 2021. They were only 13,000 barrels per day, compared with 150,000 barrels per day the previous week. Crude oil imports from Canada fell on the week, as did those from Iraq, Colombia and Brazil.

Matt Smith, an analyst at Kpler, said that "lower imports helped crude inventory eke out minor gains."

Refinery crude production fell by 31,000 barrels per day and refinery utilization rates dropped by 0.4 percentage point to 89.1%.

The EIA reported that distillate stocks, which includes diesel and heating oil fell by one million barrels. This was compared to expectations of a 1.6-million barrel drop.

U.S. heating oil futures pared gains after the report showed the smaller-than-expected draw.

Last week, the supply of petroleum products, which is a proxy for consumer demand, reached its highest level since November 2023.

Giovanni Staunovo is an analyst at UBS. He said: "This dataset shows a strong implied demand for oil, and it's reflected in the draws of commercial crude and refined product." (Reporting and editing by Marguerita Chôy in Houston, with Georgina McCartney from Houston)

(source: Reuters)