Recent data from the Energy Information Administration (EIA) has revealed an unexpected uptick in commercial crude stockpiles in the United States, marking a notable shift in the oil market landscape. According to the government report released on Wednesday, crude inventories, excluding the strategic petroleum reserve, experienced a rise of 1.4 million barrels, bringing the total to 430.7 million barrels for the week ending Friday.
This report surprised analysts, as the consensus forecast had anticipated a decrease of 2 million barrels, highlighting the volatile nature of the energy sector and the unpredictability of market trends. Furthermore, the report indicated that propane and propylene inventories also rose, adding 2.2 million barrels to the total.
In contrast, total motor gasoline inventories saw a decrease of 2.9 million barrels week-over-week, alongside a decline in distillate fuel stocks, which fell by 1.7 million barrels. The total commercial petroleum inventories witnessed a decrease of 3.1 million barrels last week, signaling potential shifts in supply and demand dynamics. In terms of refinery operations, crude-oil refinery inputs averaged 16.5 million barrels per day, an increase of 65,000 barrels compared to the previous week's average.
Refineries operated at 91.5% of their capacity, marking a slight improvement from 90.5% the week prior, which suggests a more robust operational environment amid fluctuating inventory levels. On the production side, gasoline production dipped to an average of 9.7 million barrels per day, down from 10 million barrels, while the output of distillate fuel decreased from 5 million barrels to 4.8 million barrels, according to EIA statistics.
This decline in motor fuel production could have broader implications for consumers and the energy market as a whole. As for pricing trends, West Texas Intermediate crude oil saw a decrease of 1.6%, trading at $77.09 a barrel by Wednesday afternoon, while Brent crude slipped by 1% to $79.87. These price movements reflect the ongoing adjustments in response to shifts in supply and demand as well as broader economic indicators.
Additionally, the International Energy Agency (IEA) released a report on Tuesday, projecting that global oil demand is expected to rise by less than 1 million barrels per day in both 2024 and 2025, with this forecast remaining largely unchanged from previous monthly reports. For context, oil demand saw a robust growth of 2.1 million barrels per day in 2023.
The world supply is anticipated to increase from an estimated 730,000 barrels per day in 2024 to 1.9 million barrels per day in the following year. "The IEA's monthly oil market report reflected a somewhat bearish outlook, as the agency made slight downward revisions to its demand growth forecasts for the coming year," stated ING in their Wednesday update.
This sentiment of cautious anticipation is echoed by the earlier actions of the Organization of the Petroleum Exporting Countries (OPEC), which recently lowered its forecasts for global oil demand in 2024 and 2025, further indicating a potential recalibration of the market in response to evolving economic conditions..