Key Takeaways:
US crude inventories posted a larger-than-expected draw of 1.7 million barrels last week as exports surged and refineries boosted runs, tightening supply ahead of peak summer demand.
Commercial stockpiles fell to 409.7 million barrels in the week ended July 10, the Energy Information Administration said Wednesday, compared with the 900,000-barrel decline analysts had forecast in a Wall Street Journal survey. Crude inventories now sit 6% below the five-year average for this time of year.
Crude exports jumped 459,000 barrels a day to 3.7 million, while imports edged up 60,000 barrels a day to 5.7 million. Refineries operated at 96.2% of capacity, up from 95.8% the prior week, with crude inputs rising 99,000 barrels a day to 17.1 million. US production held steady near 13.9 million barrels a day, up 475,000 barrels a day from a year earlier.
The draw comes as geopolitical risk between the US and Iran keeps a floor under prices, with Brent crude trading at $84.08 a barrel and WTI at $79.13. SPR stocks fell another 3 million barrels to 316.5 million, the lowest in more than 43 years and approaching the 250-300 million barrel operational minimum below which the reserve may struggle to pump oil efficiently. The last time SPR inventories were this low was during the Biden administration's record drawdown in 2023, when releases exceeded 200 million barrels to counter supply disruptions from the Russia-Ukraine conflict. SPR inventories are now 415 million barrels shy of maximum capacity.
Gasoline inventories declined 1.5 million barrels to 210.5 million, now 8% below the five-year average, while distillate stocks rose 4.6 million barrels against expectations of a 100,000-barrel decline. Distillate inventories remain 11% below the five-year average despite the build. At Cushing, Oklahoma, the delivery hub for WTI futures, stocks rose 430,000 barrels to 20 million.
The larger-than-expected draw reinforces a tightening supply narrative as the US driving season peaks. Total products supplied over the past four weeks averaged 20.3 million barrels a day, up 0.3% from a year earlier, while gasoline demand held at 8.8 million barrels a day. With SPR withdrawals slowing — last week's 3 million barrel release was the smallest since April — the market faces reduced access to the strategic buffer that has helped offset production declines in recent months. The last comparable stretch of sustained inventory draws was in mid-2023, when stockpiles fell for seven consecutive weeks and WTI climbed above $90 a barrel by September. The American Petroleum Institute had reported a preliminary draw of 564,000 barrels a day earlier, with the EIA's final figure coming in nearly three times larger.
Looking ahead, traders will watch for further inventory data as the peak summer driving season extends through August, when gasoline demand typically reaches its highest levels of the year. Any acceleration in SPR drawdowns could add further upward pressure on prices, particularly if Middle East tensions continue to escalate.
This article is for informational purposes only and does not constitute investment advice.
