US crude oil stockpiles grew last week and inventories on the Gulf Coast hit a record high as imports from Mexico rose to an eight-year high, the Energy Information Administration said on Wednesday.
Distillate stockpiles, which includes jet fuel and heating oil, rose 3.1 million barrels to about 177.3 million barrels, their highest level since 1983, the data showed.
The destruction of fuel demand caused by restrictions on population movements due to the coronavirus pandemic has left global oil inventories bloated. While demand is rising as restrictions ease, it is likely to take years to run inventories down.
Crude inventories rose by 5.7 million barrels in the week to July 3, compared with analysts' expectations for a decrease of 3.1 million barrels. Inventories remain about 3 per cent below an all-time high of 540.7 million barrels hit on June 19.
Gulf Coast crude inventories hit a record 309 million barrels as imports rose. Mexico shipped its highest volume to the United States since February 2012, the data showed.
Net US crude imports rose last week by 2.13 million barrels per day to 5.01 million bpd, their highest since August 2019. Gulf Coast commercial crude imports rose 1.8 million bpd to 3.2 million bpd, the highest since June 2018, the data showed.
"I didn't think there would be that big of an import number, but we saw a big spike in the (US) buying from Mexico of all places. That was what generated that build," said John Kilduff, partner at Again Capital LLC in New York.
Offsetting the bearish rise in crude inventories, US gasoline stockpiles posted their biggest fall since before the pandemic in March.
Gasoline stocks fell by 4.8 million barrels, compared with analysts' expectations for a slight decrease.
Demand for the motor fuel for the past four weeks was down 12.5 per cent on the year, but has improved from the more than 25 per cent fall on the year registered when the Northeast was under stricter lockdowns in April and May.
Crude futures turned negative after the data but have since rebounded. US gasoline futures extended gains. US crude rose 31 cents to $40.93 a barrel by 1:42 p.m. EDT (1742 GMT), while gasoline futures rose 1.27 cents to $1.2877 a gallon.