Crude oil analysis and crude oil products inventories in United States

U.S. commercial crude oil inventories, excluding the Strategic Petroleum Reserve, rose by 3.6 million barrels, totaling 460.7 million barrels. This stock level is about 2% below the five-year average for this time of year. Total car gasoline inventories increased by 2.7 million barrels, which corresponds to the five-year average.

However, distilled fuel inventories fell by 0.4 million barrels, about 9 percent below the five-year average. Propane/propylene inventories increased by 2.1 million barrels, 11% higher than the five-year average. Overall, total commercial oil inventories rose by 8.2 million barrels last week. Notably, traders were expecting a draw of 2.6 million barrels, adding a layer of surprise to the actual inventory build.

U.S. crude oil refinery inputs averaged 16.5 million barrels per day for the week ended June 21, 2024, representing a decrease of 234,000 barrels per day compared to the previous week. Refineries are operating at 92.2% of their operating capacity. Gasoline production fell by an average of 9.9 million barrels per day, while distilled fuel production rose to an average of 4.9 million barrels per day.

The United States imported an average of 6.6 million barrels of crude oil per day last week, down 443,000 barrels per day from the previous week. However, over the past four weeks, crude oil imports averaged 7.3 million barrels per day, reflecting a 13.7% increase over the same period last year. Imports of engine gasoline, including finished gasoline and mixing ingredients, averaged 762,000 barrels per day. Distilled fuel imports averaged 133,000 barrels per day.

The data points to mixed expectations for the crude oil market. The increase in commercial crude oil inventories coupled with lower refinery and gasoline production inputs point to potential downward pressure on crude oil prices. However, rise in distilled fuel production and stable product supply metrics offer some bullish counterpoints.

The impact of increased inventories on crude oil prices in the United States

Crude oil prices fell today, after the U.S. Energy Information Administration announced an inventory increase of 3.6 million barrels for the week ended June 21.

That’s in comparison with the 2.5 million barrel withdrawal that pushed prices higher last week, accompanied by lower gasoline and middle distillate inventories as well, suggesting a boost in demand.

The American Petroleum Institute yesterday estimated that oil inventories increased by less than one million barrels for the week ended June 21, which weighed on prices despite its volume.

The Energy Information Administration also announced an increase in gasoline inventories by 2.7 million barrels last week, compared to a decrease of 2.3 million barrels the previous week. Gasoline production last week averaged 9.9 million bpd, compared to 10.2 million bpd the previous week.

In medium distillates, the Energy Information Administration estimated inventory withdrawals at 400,000 barrels for the week ended June 21, compared to a withdrawal of 1.7 million barrels for the previous week. Average distillate production was 4.9 million bpd last week, compared to 4.8 million bpd the previous week.

Meanwhile, oil prices rose earlier in the day despite the bearish inventory report from the American Petroleum Institute. The rise was driven by growing concerns about conflicts in the east as well as expectations of a further increase in oil demand in the third quarter.

“The market seems to be ignoring demand concerns for now, expecting a decline in inventory at the peak demand season in the third quarter. The official inventory figures released by the Energy Information Administration today will provide the market with further indications of this trend.

The Impact of U.S. Oil Inventories on Oil Markets

U.S. crude oil inventories have a significant impact on oil markets due to the U.S. position as one of the world’s largest oil consumers, producers, and importers. Volatility in U.S. crude oil inventories can affect market sentiment, supply and demand dynamics, and global oil prices. Here are some of the main effects of U.S. crude oil inventories on markets:

Price volatility: Changes in U.S. crude oil inventories can lead to price volatility in oil markets. If inventories increase unexpectedly, indicating high supply levels or declining demand, it could put downward pressure on oil prices. Conversely, a significant drop in inventories may indicate supply constraints or increased demand, which can lead to higher prices. Traders and investors closely monitor inventory data to assess the conditions of Market and make trading decisions.

Market sentiment: US crude oil inventory reports, especially those from the US Energy Information Administration (EIA), can affect market sentiment. If inventories deviate significantly from market expectations, it could affect traders’ perception of market fundamentals and future price trends. Building or drawing up large inventories can create bullish or bearish sentiments, respectively, affecting trading activities and the behavior of market participants.

Impact on energy companies: U.S. crude oil inventories can significantly impact energy companies, including oil producers, refineries, and traders. Inventory levels affect companies’ revenues and profitability. For example, rising inventories can lead to lower selling prices for oil producers, affecting their profitability. Conversely, lower inventories could create opportunities for refiners and traders to take advantage of potential price increases.

Overall, U.S. crude oil inventories provide important insights into the supply and demand dynamics of the oil market. They affect market sentiment, price fluctuations, investment decisions, and trading strategies of market participants around the world.

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