Recent reports indicate a significant decline in commercial crude stockpiles in the United States, exceeding prior projections for the week ending last Friday. More specifically, inventories of crude oil, not including the Strategic Petroleum Reserve, saw a reduction of 4.2 million barrels, bringing the total down to 416.8 million barrels.
The forecasts from the Energy Information Administration (EIA) predicted a decrease of only 600,000 barrels. This reduction positions current inventories at 5% below the five-year average for this timeframe. In addition to crude, inventories for propane and propylene plunged by 4.5 million barrels, while stocks of distillate fuel also fell by 1.7 million barrels.
Interestingly, total motor gasoline stocks experienced an increase of 1.6 million barrels. Overall, the data from the EIA indicates a decline of 12.7 million barrels in total commercial petroleum inventories. Gasoline production showed a modest rise to an average of 9.9 million barrels per day, with distillate fuel output slightly increasing to 5.3 million barrels per day, up from 5.1 million. On the pricing front, West Texas Intermediate crude oil experienced an increment of 1.3%, reaching $70.50 per barrel, while Brent crude climbed by 1.2%, achieving a price of $73.69.
Such price movements could have implications for investors and stakeholders in the energy sector. In a separate report from Baker Hughes, an energy services firm, the number of oil rigs actively operating in the United States remained steady at 483 for the reported week. Notably, the count for gas rigs held at 102, and miscellaneous rigs stayed at four.
To provide context, the US had a significantly higher total of 500 oil rigs, 120 gas rigs, and two miscellaneous rigs operational a year prior. As of last Friday, there were 589 rigs in operation across the US, a decrease from 622 rigs compared to the same week last year. Focusing on state-level production, Texas, the leading oil-producing state, reported a loss of one rig, dropping to 284 from the previous week.
Conversely, North Dakota added one rig to its total. On a broader scale, rig counts across North America saw a decline of 71, bringing the total to 684. Canada reported a similar decrease, falling to 95 active rigs. These trends in inventory and rig counts are crucial indicators for understanding the current dynamics of the oil market, and they provide significant insights for savvy investors looking to navigate this volatile landscape effectively..