Small Decline in US Crude-Oil Inventories

According to data released by the Energy Information Administration (EIA) on Wednesday, US crude-oil inventories experienced a slight decrease last week. Additionally, crude stockpiles at the main hub in Oklahoma saw the most significant drop since late 2021.

Impact on Oil Prices

Following the release of the report, benchmark US oil prices, which were initially higher, saw a reduction in their gains. The Nymex front-month crude contract for August delivery was up 0.4% at $76.04 per barrel.

Decrease in Commercial Crude-Oil Stockpiles

The EIA reported a decrease of 708,000 barrels in commercial crude-oil stockpiles last week, bringing the total to 457.4 million barrels. However, this level remains 1% above the five-year average. Analysts surveyed by The Wall Street Journal had predicted a larger decrease of 1.8 million barrels compared to the previous week.

Contribution of Strategic Petroleum Reserve Sales

Part of the reason for the decrease in stockpiles can be attributed to the Department of Energy’s recent sales of crude oil from the Strategic Petroleum Reserve to the commercial side. The EIA noted that the SPR remained unchanged at a historic low of 347 million barrels.

Significant Decline in Cushing, Oklahoma

Oil stored at Cushing, Oklahoma, which serves as the delivery point for US stocks, experienced the steepest weekly decline since October 22, 2021. The EIA’s weekly report indicated a drop of 2.9 million barrels, reducing the total to 38.3 million barrels.

In conclusion, while US crude-oil inventories saw a moderate decline last week, the reduction was mainly driven by sales from the Strategic Petroleum Reserve and a significant drop in stockpiles at Cushing, Oklahoma. These developments had a slight impact on oil prices, which initially showed gains but were later trimmed.

U.S. Crude-Oil Production Remains Steady

The latest report from the Energy Information Administration (EIA) reveals that U.S. crude-oil production for the week remained unchanged at 12.3 million barrels a day. This data suggests stability in the oil industry, despite various factors impacting the global market.

Gasoline Stockpiles See Modest Decline

Analysts’ expectations were met as gasoline stockpiles fell by 1.1 million barrels to 218.4 million barrels. This decline was in line with projected forecasts and indicates a potential shift in market dynamics.

Distillate Stocks Show Minimal Change

Distillate stocks, primarily comprising diesel fuel, experienced negligible growth, rising by a marginal 13,000 barrels to 118.2 million barrels. It is important to note that these inventory levels are still 14% below the five-year average, providing insight into the current demand for distillates in the market. Analysts had anticipated a larger increase of approximately 200,000 barrels last week, making this data particularly noteworthy.

Unexpected Rise in Refining Capacity Utilization Rate

The surprise of the report came from the refining capacity utilization rate, which unexpectedly increased by 0.6 percentage points from the previous week to reach 94.3%. This positive shift defied expectations of a 0.1-percentage-point decrease and highlights the resilience of the refining sector.

Summary of U.S. Oil Inventories (Week ending July 14)

• Crude: -0.7 million barrels
• Gasoline: -1.1 million barrels
• Distillates: No change
• Refinery Use: +0.6 percentage points

The latest EIA report provides valuable insights into the current state of the U.S. oil market, shedding light on production levels, stockpile movements, and refining capacity. As the industry continues to navigate various challenges, staying informed about these metrics becomes increasingly crucial for all stakeholders.