US crude oil refinery inputs averaged 16.6 million barrels per day (bpd) during the week ended December 13, 2024, down 48,000 bpd from the previous week’s average. Refiners operated at 91.8% of capacity last week. Gasoline production fell last week, averaging 9.9 million bpd. Distillate fuel production fell last week, averaging 5.1 million bpd.
US crude oil imports averaged 6.6 million bpd last week, up 665,000 bpd from the previous week. Over the past four weeks, crude oil imports have averaged about 6.5 million bpd, down 2.1% from the same four-week period a year ago. Motor gasoline imports (including finished gasoline and gasoline blending components) averaged 755,000 bpd last week, and distillate fuel imports averaged 164,000 bpd.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell 0.9 million barrels from the previous week. At 421.0 million barrels, U.S. crude oil inventories are about 6% below the five-year average for this time of year. Total motor gasoline inventories rose 2.3 million barrels from the previous week and are about 3% below the five-year average for this time of year. Finished gasoline inventories fell while blending component inventories increased last week. Distillate fuel inventories fell 3.2 million barrels last week and are about 7% below the five-year average for this time of year. Propane/propylene inventories fell 3.0 million barrels from the previous week and are about 7% above the five-year average for this time of year. Total commercial petroleum inventories fell 3.2 million barrels last week.
Total product deliveries over the past four-week period averaged 20.4 million barrels per day, up 1.3% from the same period last year.
Market Reactions to Crude Oil Inventory Report Mixed
Following the release of the inventory data, market reactions were mixed, reflecting a mix of optimism and caution among investors. On the other hand, the decrease in inventories, albeit smaller than expected, can be interpreted as a sign of resilient demand, especially as winter approaches. Seasonal fluctuations in demand for heating oil and gasoline often lead to increased consumption, which could further support prices. Oil prices rose modestly following the report, as traders anticipated potential supply constraints in the coming weeks. The initial market response was a testament to the optimism surrounding the ongoing global economic recovery and the potential for further tightening in supply.
Market reactions to these inventory reports are often immediate and clear. Traders closely watch these numbers to make informed decisions about buying or selling oil futures. Market sentiment surrounding crude oil can change quickly based on inventory data, making the weekly EIA reports crucial to forecasting price movements.
In this context, the latest inventory figures, which showed a smaller-than-expected draw, suggest that while demand remains strong, there may be some easing in the rate of inventory depletion, which could temper recent price gains. Additionally, the overall trend in crude oil inventories can provide insights into the health of the broader economy, as oil consumption is closely linked to economic activity.
However, caution remains in the markets as traders weigh various factors that could influence future price movements. For example, ongoing geopolitical tensions in key oil-producing regions, as well as volatile production levels from OPEC and non-OPEC countries, create uncertainty about the sustainability of current price levels.
Oil Price Volatility Expected Due to Oil Inventories
Looking ahead to the month ahead, market analysts are cautiously optimistic about crude oil inventories and their potential impact on prices. Expectations are that inventories are likely to continue to decline, albeit at a slower pace than in previous months.
The consensus is that demand will remain strong, especially in the face of seasonal increases in consumption during the winter months. Factors such as cold weather, increased heating oil usage, and ongoing economic recovery efforts are likely to support demand levels, contributing to further inventory draws. These fluctuations in crude oil inventories are extremely important indicators for market analysts, traders, and investors, as they provide insight into supply and demand dynamics and can significantly impact oil prices, the energy sector, and the broader economy.
Oil prices are likely to remain supported in the near term, with further volatility possible depending on economic developments and supply-side dynamics. As always, the oil market remains a complex and evolving landscape, and traders will need to remain alert to any changes in data or broader market conditions.
In addition, expected production levels from OPEC and its allies will play a crucial role in shaping the supply landscape. OPEC’s continued commitment to managing production levels has been instrumental in supporting oil prices throughout 2023. If the cartel maintains current production cuts or implements further cuts, this could exacerbate the inventory drawdown and support higher prices in the near term. Conversely, any increase in production levels, especially from US shale oil, will weigh on oil prices.
Concerns about a potential economic slowdown, especially in major economies such as China and the European Union, could dampen demand expectations, leading to more volatility in oil prices. The mixed reactions from traders highlight the complexity of the current oil market landscape.
