Commercial crude stockpiles in the US reported a surprising build last week alongside increases in distillate fuel and total motor gasoline inventories, based on government data released Wednesday. Inventories of crude, excluding the strategic petroleum reserve, climbed by 2.1 million barrels to 427.7 million barrels for the week ending Friday, the Energy Information Administration noted.
This was contrary to market expectations which predicted a decrease of 90,000 barrels. Current inventories are 5% below the five-year average for this season. Distillate fuel inventories saw a rise of 2.9 million barrels week-on-week, while total motor gasoline experienced an addition of 400,000 barrels.
However, stocks of propane and propylene dropped by 1 million barrels. Taken together, total commercial petroleum inventories decreased by 1.1 million barrels last week, according to the EIA's data. Crude refinery outputs averaged 16.3 million barrels per day last week, an increase of 281,000 barrels compared to the previous week's daily average.
Refineries operated at 90.5% of their capacity, a rise from 89.1% the week before. Gasoline production experienced a slight uptick week to week, maintaining a solid 9.7 million-barrel-per-day average. The output for distillate fuel rose to 5.1 million barrels per day, up from 4.9 million barrels week to week.
In market pricing, West Texas Intermediate crude oil dipped by 0.1% to $71.92 a barrel by Wednesday afternoon, while Brent crude slid by 0.4% to $75.19. In political news, Donald Trump, the Republican nominee, triumphed over Kamala Harris, the vice president and Democratic candidate, in the US presidential election held on Tuesday.
The oil market is currently facing pressure from fears that a retaliatory global trade war may dampen demand and contribute to an already weak market outlook anticipated for 2025. Saxo Bank's Head of Commodity Strategy, Ole Hansen, expressed these concerns in a report, highlighting that increasing tariffs could impede global economic growth and diminish energy demand.
Moreover, Trump's potential return to the White House may lead to stricter oil sanctions against Iran. Hansen further commented, “The geopolitical landscape will also warrant close scrutiny, particularly regarding US-Russia relations, the ongoing Russia-Ukraine conflict, and the Middle East, where a Trump administration might enforce tighter sanctions on Iranian oil flows.”.