In a recent report released by the Energy Information Administration (EIA), commercial crude stockpiles in the United States saw a decline that surpassed analysts' expectations. The data revealed a reduction of 3.7 million barrels, bringing the total inventory down to 436.5 million barrels for the week ending July 19.
This decrease was more substantial than the consensus forecast, which estimated a decline of only 2.8 million barrels according to a survey conducted by Bloomberg. The report also highlighted significant movements in gasoline and distillate fuel stocks. Total motor gasoline inventories decreased by 5.6 million barrels in comparison to the previous week, indicative of strong demand or reduced production during this period.
Meanwhile, distillate fuel stocks contracted by 2.8 million barrels. Interestingly, the report pointed to an increase in propane and propylene stocks, which rose by 1.8 million barrels, now sitting 15% above the five-year average for this time of year. Overall, the EIA noted that total commercial petroleum inventories fell by 4.6 million barrels last week, signaling tighter market conditions. Refinery activity also showed signs of decline, with crude-oil refinery inputs averaging 16.4 million barrels per day— down 521,000 barrels from the previous week.
Refineries operated at 91.6% of their capacity last week, a downturn from 93.7% noted in the prior week. Comparatively, crude stocks remain about 5% below the five-year average for this season, highlighting ongoing supply dynamics. In terms of production, gasoline output surged to 10.2 million barrels per day, a notable increase from the 9.5 million barrels per day recorded the week before.
In contrast, distillate fuel production decreased to 4.9 million barrels per day last week, down from 5.2 million barrels per day. On the trading front, West Texas Intermediate (WTI) futures saw a modest increase of 0.7%, trading at $77.63 per barrel as of the afternoon session. Conversely, Brent crude was up by 0.8% at $81.69 per barrel.
It is worth noting that Brent had settled 1.7% lower on Tuesday, reaching its weakest level since June. Market sentiment appears to be influenced by a mix of factors, including disappointing economic data emerging from China and potential supply risks stemming from wildfires in Canada. The Australia and New Zealand Banking Group (ANZ) commented on the current climate, indicating that supply disruptions have indeed escalated.
They further remarked that with mounting pressure on prices, the Organization of the Petroleum Exporting Countries (OPEC) may need to review its intentions regarding the gradual phasing out of voluntary cuts implemented by its member nations. This evolving situation presents a case for investors to closely monitor developments within the energy sector as the implications of diminished inventories and shifting production levels unfold..