U.S. commercial crude oil inventories increased by 2.1 million barrels in the week ended Nov. 27 from the previous week, according to the Energy Information Administration's weekly petroleum report. Crude inventories stand at 339.9 million barrels, above the upper average limit of for this time of year and the highest since August. Gasoline supplies rose by 4 million barrels from the previous week to 214.1 million barrels. Distillate fuel inventories, which includes diesel and heating oil, decreased by 1.2 million barrels. Distillate stocks are still above the seasonal average.
Consumption didn't look much better, according to the Energy Department report. Diesel demand was down 7.7 percent compared to the same period last year and gasoline consumption was a smidgen higher at 0.7 percent.
All of this is bad news for refiners, especially in the diesel camp. Refineries last week operated at 79.7 percent of capacity as companies scaled back diesel production once again. Valero Energy, the largest U.S. refiner until recently, announced last month plans to shutdown its Delaware facility permenantly. The shutdown of the facility -- fueled by shrinking margins and continued weak demand -- allowed ExxonMobil to surpass it as the top U.S. refiner.
And the effects are being felt beyond the refinery doors. Cummins Inc., the largest maker of heavy-duty diesel truck engines in North America, plans to cut 400 jobs because of lower demand, Bloomberg reported Wednesday.