According to the latest government data released on Wednesday, commercial crude stockpiles in the United States experienced a more significant dip than analysts had anticipated last week. Specifically, crude inventories, excluding the strategic petroleum reserve, decreased by 3.7 million barrels, bringing the total down to 429.3 million barrels for the week ending August 2, as reported by the Energy Information Administration (EIA).
This decline surpassed the consensus forecast of a 1.8 million-barrel reduction, which was estimated in a recent poll conducted by Bloomberg. In contrast to the decrease in crude oil stockpiles, total motor gasoline inventories saw an increase of 1.3 million barrels, reflecting a continued demand for fuel amidst fluctuating crude prices.
Additionally, the inventories of distillate fuels rose by 900,000 barrels, while propane and propylene stocks added 500,000 barrels during the same period, according to the EIA's report. Overall, the total commercial petroleum inventories grew by 1.2 million barrels last week, illustrating a complex dynamic in the oil market. The operational capacity of refineries demonstrated a slight increase as crude-oil refinery inputs averaged 16.4 million barrels per day, representing an uptick of 252,000 barrels compared to the previous week's average.
Last week, refineries operated at 90.5% of their capacity, up from 90.1% the week before, indicating a robust processing activity amid changing inventory levels. Notably, crude stock levels were approximately 6% below the five-year average for this time of year, highlighting the tightening supply situation in the market. On the production side, gasoline and distillate fuel outputs averaged 10 million barrels and 5 million barrels per day, respectively, suggesting stability in the fuel markets as the previous week's figures remained largely unchanged, according to the EIA data. Amid these developments, West Texas Intermediate crude oil prices rose by 2.8% to reach $75.27 a barrel during intraday trading on Wednesday.
Analysts attribute this price increase to growing supply concerns as noted by D.A. Davidson in a communication to their clients. The global oil market is also currently navigating geopolitical challenges, particularly with reports indicating that the Sharara oilfield in Libya has completely halted production amid ongoing protests.
This facility has a production capacity of 300,000 barrels per day and was reportedly producing close to 270,000 barrels before the disruptions, as stated in a Tuesday report from ING. Moreover, the oil markets are closely monitoring developments in Iran, especially in response to Israel's threats of retaliation following the assassination of Hamas' political leader, Ismail Haniyeh, in Tehran.
These geopolitical tensions add an additional layer of complexity to the already volatile oil landscape, as investors brace for potential shifts in supply and production..