Key Takeaways:
US crude inventories posted a much larger-than-expected draw last week as refineries boosted throughput to near-maximum levels and imports fell, tightening domestic supply.
"The 7.2-million-barrel draw reflects a market that is significantly tighter than anticipated, driven by strong refinery demand and declining imports," said Omar Tariq, energy analyst at Edgen. "Refinery runs at 97.2% of capacity suggest operators are maximizing output to meet robust fuel demand."
Commercial crude stocks excluding the Strategic Petroleum Reserve fell to 404.5 million barrels in the week ended July 24, the Energy Information Administration reported Wednesday. The draw dwarfed the 600,000-barrel decline analysts had forecast in a Wall Street Journal survey. Imports dropped 124,000 barrels a day to 5.7 million barrels a day, while exports rose 114,000 barrels a day to 3.5 million barrels a day. Crude production held steady at 13.8 million barrels a day.
The inventory data underscores a market where supply is struggling to keep pace with demand, a dynamic that has pushed crude prices sharply higher. Brent crude surged $5.94 to $90.03 a barrel Wednesday, while West Texas Intermediate rose $5.51 to $84.77 a barrel, as the draw coincided with escalating geopolitical risks in the Middle East.
Gasoline inventories were virtually unchanged at 211.3 million barrels, remaining 6% below the five-year average for this time of year. Gasoline demand rose 94,000 barrels a day to 9 million barrels a day. Distillate fuel inventories increased by 1.1 million barrels to 110.6 million barrels, against expectations of a 300,000-barrel decline, and were about 9% below the five-year average. Distillate production averaged 5.4 million barrels a day.
Total products supplied over the last four weeks — a proxy for US oil demand — averaged 20.3 million barrels a day, down 2.3% from the same period last year. Gasoline demand over the four-week period averaged 8.9 million barrels a day, while distillate demand averaged 3.7 million barrels a day, up 4.7% year over year.
Oil held in the Strategic Petroleum Reserve fell by 3.8 million barrels to 307.7 million barrels as the government continued emergency releases. Stocks at the Nymex delivery hub in Cushing, Oklahoma, declined by 771,000 barrels to 18.6 million barrels. Propane-propylene inventories rose by 2.5 million barrels and are now 34% above the five-year average.
The combination of surging refinery demand, falling imports, and rising exports points to a domestic crude market that is tightening faster than many analysts anticipated. With refinery utilization already near capacity, any further demand increase or supply disruption could put additional upward pressure on prices.
This article is for informational purposes only and does not constitute investment advice.
