Recent government data reveals that commercial crude reserves in the United States experienced a smaller decrease than anticipated last week, with increases in both distillate fuel and propane inventories. According to the Energy Information Administration (EIA), crude stockpiles, excluding the strategic petroleum reserve, fell by 800,000 barrels, settling at 425.2 million barrels for the week ending Friday.
This outcome was notably lower than the expected reduction of 2.8 million barrels, as projected by a Bloomberg survey. In contrast to the decline in crude oil, propane and propylene stocks saw an upswing, rising by 1 million barrels. Furthermore, distillate fuel inventories witnessed an addition of 300,000 barrels, indicating a shift in the overall inventory landscape.
Total motor gasoline supplies declined by 2.2 million barrels, yet overall commercial petroleum inventories decreased by 3.1 million barrels throughout the past week, as reported by the EIA. On the production side, crude-oil refinery input levels averaged 16.9 million barrels per day, reflecting a marginal increase of 175,000 barrels from the previous week’s figures.
Refineries utilized 93.3% of their capacity last week, which is up from 92.3% the prior week, suggesting a consistent demand for refining operations. When looking at distillate fuel production, output showed a slight uptick, averaging 5 million barrels per day, a rise from 4.9 million barrels the previous week.
Conversely, gasoline production dipped to an average of 9.6 million barrels per day, down from 9.8 million barrels. As for market prices, West Texas Intermediate (WTI) crude oil experienced a decline of 1.2%, settling at $74.66 a barrel by Wednesday afternoon, while Brent crude fell 1.2% to $77.69.
Both benchmarks appeared set to close in the negative for a consecutive second session, following a movement on Tuesday that could best be described as technically motivated. According to Saxo's analysis, this followed Brent's failure to surpass the crucial 200-day moving average. The current market conditions are characterized by a pronounced tug-of-war between pessimism about demand and the impacts of supply disruptions, which are likely to keep oil prices constrained within a specific range for the foreseeable future, Saxo indicated in their notes.
Investors and market participants must remain vigilant as these dynamics evolve, impacting both short-term and long-term strategies in the energy sector..