Industry guesstimates were universally off-base this week as the U.S. Energy Department's weekly inventory report played havoc with over/under parlays.

Crude oil stocks, which were expected to be off anywhere from 300,000 to 1.7 million barrels, rose by 1.7 million barrels. There was the faint breath of oversupply in pre-market trading as crude oil traded was swapped at slightly lower prices. At 301.8 million barrels, U.S. crude oil inventories, though, are still below seasonal averages.

Yesterday, the crude oil market was quiet. The United States Oil Fund (AMEX: USO) closed virtually unchanged Tuesday at $110.95, but was off 29 cents in pre-market trading this morning. At the open, spot NYMEX crude opened 80 cents lower ahead of the inventory report while USO widened its pre-market loss to 58 cents a share.

Refinery usage, which had been expected to rise 0.2% this week to 89.5%, instead fell to 88.6%. Operations, though, were more efficient as gasoline and distillate fuel production rose.

One-month crack spreads shrank $1.45 a barrel on NYMEX over the week, consistent with normal seasonality. The spot refining margin stood at 10.2% at the close Tuesday. Heating oil prices were narrowly lower over the week while gasoline prices rose 1.7%. Crude input costs rose 2.2%.

Rising storage costs and high crude prices are keeping refiners shy about building inventories. The nearby quarterly contango stood at 78 cents a barrel yesterday, about half last week's level.

Gasoline inventories decreased 100,000 barrels last week. Industry expectations ranged from an increase of 200,000 barrels to a drawdown of up to 750,000 barrels. Supplies remain below normal despite an increase in production to 9.1 million barrels per day.

This week's MasterCard's SpendingPulse survey revealed U.S. demand for gasoline fell 2.7% percent last week compared with year-ago levels.

Distillate stocks, including inventories of diesel and heating oil, increased by 2.8 million barrels, ahead of expectations of a 1.5-million-to-1.7-million-barrel increase. Production of middle distillates increased to 4.6 million barrels per day over the last week. The uptick in stocks caught traders by surprise. Heating oil has been slightly higher overnight, while yesterday's $62.05-per-share close in the United States Heating Oil Fund (AMEX: UHN) represented a 14-cent gain on the day.

NYMEX Crack Spreads/Refining Margins