US Crude Stockpiles Decline Less Than Expected, Fuel Inventories Rise

U.S. commercial crude oil inventories registered a smaller-than-expected decline last week, while stockpiles of gasoline and distillates unexpectedly rose, signaling potentially softer fuel demand. The data comes from the weekly petroleum status report released Wednesday by the U.S. Energy Information Administration (EIA).

Inventory Data Highlights

For the week ending Sept. 11, the EIA reported a mixed set of figures that diverged from market expectations. The data points to a potential imbalance between supply and demand for refined products.

• Crude oil inventories decreased by 640,000 barrels to 423.4 million barrels. This was significantly below the 1.6 million-barrel draw forecast by analysts.
• Gasoline stockpiles unexpectedly rose by 794,000 barrels to 207.7 million barrels. Analysts had predicted a 1 million-barrel decrease.
• Distillate fuel inventories, which include diesel and heating oil, increased by 1.6 million barrels to 107.9 million barrels, far exceeding the expected build of 71,000 barrels.
• Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell by 342,000 barrels.

Refinery Activity and Imports

Operational data from the report indicated a slowdown in processing activity. Refinery crude runs decreased by 256,000 barrels per day during the week, according to the EIA.

Ad

Consequently, refinery utilization rates fell by 1.0 percentage point to 96.8% of total capacity. The report also showed that U.S. net crude oil imports saw a sharp decline, falling by 1.18 million barrels per day compared to the previous week.

Market Implications

The combination of a smaller-than-expected crude draw and builds in refined products is often viewed as a bearish signal for the oil market. It suggests that demand for end-products like gasoline and diesel may be weakening, leading to a backup in supply.

The unexpected rise in gasoline stocks is particularly notable, as it defies analyst forecasts and raises questions about the strength of consumer fuel consumption. The concurrent drop in refinery activity could be a response to lower demand or thinning profit margins for producing fuels.