Rewrites throughout adding comments and milestones

By Georgina McCartney and Arathy Somasekhar

HOUSTON, July 1 (Reuters) - U.S. crude stocks fell to their lowest last week since 2018 as domestic refinery demand rose, while gasoline inventories also fell ahead of the July 4 holiday weekend, the Energy Information Administration said on Wednesday.

Commercial crude inventories fell by 3.8 million barrels to 408.4 million barrels last week, the lowest level since September 2018, compared with analysts' expectations in a Reuters poll for a 4.5 million-barrel draw.

Since the Iran war started at the end of February, total U.S. inventories, including commercial stocks and those in the government's emergency reserve, have fallen by 120.71 million to 734 million barrels, the lowest since May 1984.

Crude stocks at the flagship Cushing, Oklahoma, delivery hub USOICC=ECI rose by 709,000 barrels, the EIA said, after falling nine straight weeks to below the operational minimum of around 20 million barrels.

"Cushing is still at minimum operating levels... the industry is living hand to mouth on Cushing inventories," said Andrew Lipow, president of Lipow Oil Associates.

Brent futures LCOc1 extended losses and fell by 1.6% while U.S. crude futures CLc1 were little changed and were down around 1% after the smaller-than-expected drop in crude stocks.

Refinery crude runs USOICR=ECI rose by 85,000 barrels per day in the week ended June 26, while refinery utilization rates USOIRU=ECI rose by 0.5 percentage points in the week to 96.6%.

"U.S. refiners are just cranking it out, operating full tilt here and it's needed," said John Kilduff, partner with Again Capital.

Gasoline supplied, a proxy for demand, rose last week by 356,000 bpd to 9.13 million bpd.

"It was a very strong gasoline demand week. I was concerned about the high prices and maybe that the economy was flagging, but to be back over 9 million barrels a day (of demand) is where we should be for this time of year," Kilduff said.

U.S. gasoline stocks USOILG=ECI fell by 2.3 million barrels in the week to 214 million barrels, the EIA said, compared with analysts' expectations in a Reuters poll for a 1 million-barrel draw.​ Stocks along the U.S. Gulf Coast fell last week to their lowest since October 2024.

U.S. gasoline futures RBc1 extended gains and were up 1.1% after the data showed the larger-than-expected draw in U.S. gasoline stocks. The U.S. national gasoline price at the pump was around $3.85 a gallon on Wednesday, according to the AAA.

U.S. President Donald ​Trump said on Monday gasoline retailers must get ‌prices down immediately and warned that there will be "big problems" ahead if they did not do so. Trump urged retailers to target $2.50 a gallon.

Distillate stockpiles USOILD=ECI, which include diesel and heating oil, rose by 2.5 million barrels in the week to 108.6 million barrels, versus expectations for a 0.5 million-barrel drop.

U.S. diesel futures HOc1 pared gains and rose around 0.4% after the data showed the surprise build in distillate stocks.

Net U.S. crude imports USOICI=ECI rose last week by 370,000 barrels per day, EIA said.