According to data released by the U.S. Energy Information Administration (EIA), U.S. crude oil inventories fell more than expected last week due to a decrease in production and refinery runs caused by severe winter weather across the country.
Decrease in Commercial Crude-Oil Stocks
In the week ending on January 19, commercial crude-oil stocks, excluding the Strategic Petroleum Reserve (SPR), fell by 9.2 million barrels to 420.7 million barrels. This represents a decline of about 5% compared to the five-year average for this time of year. Analysts surveyed by The Wall Street Journal had predicted a smaller decrease of 1.4 million barrels.
Storage in the Strategic Petroleum Reserve
Storage in the SPR, on the other hand, increased by 920,000 barrels to reach 356.5 million barrels.
Oil Stored at Cushing, Oklahoma
Oil stored at Cushing, Oklahoma, which serves as the Nymex delivery hub, also experienced a significant decrease. It fell by 2 million barrels to 30.1 million barrels.
Refineries Reduce Capacity Use
Refineries across the U.S. reduced their capacity use to 85.5% from the previous week's 92.6%. This decrease was in line with expectations, with refinery runs expected to be down by 0.6 percentage point.
Decrease in U.S. Oil Production
The EIA estimated that U.S. oil production declined by 1 million barrels per day to a daily average of 12.3 million barrels.
Impact of Winter Storm
U.S. Crude Exports and Imports Experience Decline
The latest data reveals a decrease in both U.S. crude exports and imports. Crude exports have fallen by 595,000 barrels per day to 4.4 million barrels per day, while crude imports have dropped by 1.8 million barrels per day to 5.6 million barrels per day.
Positive Impact on Oil Futures
Following this report, oil futures have experienced an extended gain. The West Texas Intermediate crude for March delivery has risen by 1.3% to reach $75.32 per barrel, and the international benchmark Brent has increased by 0.9%, reaching $80.24 per barrel.
Increase in Gasoline Stockpiles
Gasoline stockpiles in the U.S. have recorded a notable increase. Last week, they rose by 4.9 million barrels, reaching a total of 253 million barrels. This outcome defied expectations, as it was anticipated that gasoline inventories would only witness a 1.5 million-barrel build. According to the EIA, current gasoline inventories are approximately 1% above the five-year average.
Decline in Distillate Stocks
However, distillate stocks, primarily consisting of diesel, have experienced a different trend. They have decreased by 1.4 million barrels, settling at 133.3 million barrels. This figure is 4% below the five-year average. Preliminary forecasts suggested that inventories of distillate fuels would decline by 700,000 barrels.
Adjusted Demand Levels
In terms of demand, there has been a decrease in gasoline demand and an increase in distillates demand. Gasoline demand has fallen by 388,000 barrels per day compared to the previous week, resulting in a daily consumption of 7.9 million barrels. On the other hand, distillates demand has risen by 139,000 barrels per day, reaching a total of 3.8 million barrels per day, according to the EIA.
U.S. Oil Inventory Changes Comparison
To put these figures in perspective, a summary of the change in U.S. oil inventories for the week ended January 19 is as follows:
- Crude: -9.2 million barrels (EIA data) vs. -1.4 million barrels (forecast)
- Gasoline: 4.9 million barrels (EIA data) vs. 1.5 million barrels (forecast)
- Distillates: -1.4 million barrels (EIA data) vs. -0.7 million barrels (forecast)
- Refinery Use: -7.1 percentage points (EIA data) vs. -0.6 percentage points (forecast)
Note: All measurements are in millions of barrels, except for refinery use, which is in percentage points.
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