Recent data from the Energy Information Administration has revealed that commercial crude stockpiles in the United States have increased more than anticipated. For the week ending Friday, inventories of crude, excluding the strategic petroleum reserve, rose by 3.6 million barrels, reaching a total of 433.8 million barrels.
This gain significantly exceeded the market consensus of 800,000 barrels, as determined by a Bloomberg poll. In contrast, the trends for distillate fuel stocks and total motor gasoline inventories presented a different picture altogether. Distillate fuel stocks witnessed a decline of 1.3 million barrels, while total motor gasoline saw a drop of 1.4 million barrels.
Additionally, propane and propylene inventories fell by 2.9 million barrels. Overall, commercial petroleum inventories declined by 4.6 million barrels last week, indicating a complex interplay of market forces. Refinery operations were recorded at 85.9% capacity, a decrease from the previous week's 86.5%.
While gasoline production saw an uptick, output for distillate fuel cooled, showcasing the varying dynamics within the oil refining sector. In market activity, West Texas Intermediate crude oil experienced a decline of 2.7%, trading at $66.41 a barrel, compared to Brent, which was down 2.3%, resting at $69.40. Saxo Bank pointed out that crude oil prices are trading lower as concerns mount regarding the potential repercussions of a global trade war on global economic activity, which could dampen demand for fuel products.
Amidst these economic uncertainties, President Donald Trump has exempted automakers from tariffs on imports from Mexico and Canada for a month, as reported by CNBC and Bloomberg. These tariffs, announced recently, have been set at 25% and became effective on Tuesday, paralleled by a doubling of levies on imports from China.
In response, both Canada and China have announced counter measures, complicating the international trade landscape. Furthermore, the potential for increased supply from the Organization of the Petroleum Exporting Countries (OPEC) and its allies is also influencing market sentiment negatively, noted ING Bank in their latest analysis.
Overall, these developments illustrate a fluctuating landscape in the oil market, influenced by both domestic stockpiles and international trade policies..