U.S. commercial crude oil inventories decreased by 2.3 million barrels last week, bringing total stockpiles to 430.2 million barrels. Despite this drawdown, inventories remain within a typical seasonal range. The decline coincided with an increase in refinery activity, as utilization rates rose to 86.5%, reflecting a steady recovery in crude processing.
Refineries processed 15.7 million barrels per day (bpd), marking a continued rise in throughput. This uptick suggests a seasonal shift in demand for refined products, with refiners adjusting production to meet evolving consumption patterns. The higher refinery runs indicate confidence in product demand, even as broader economic factors weigh on crude oil prices.
Fuel Production and Market Adjustments
Refinery output showed diverging trends across fuel categories. Gasoline production declined to 9.2 million bpd, reflecting a seasonal slowdown in demand, while distillate fuel production increased to 5.2 million bpd, suggesting a stronger focus on diesel output to meet industrial and transportation needs.
Despite higher diesel production, total petroleum stockpiles, including crude and refined products, fell by 2.2 million barrels, reinforcing the tightening supply outlook. Gasoline inventories saw a slight build of 0.4 million barrels, while distillate stocks remain constrained despite increased output. Total petroleum demand over the past four weeks averaged 20.3 million bpd, marking a 4.2% year-over-year increase, signaling steady consumption growth.
Impact on Oil Prices and Market Sentiment
Although crude inventories declined and refinery utilization strengthened, West Texas Intermediate (WTI) crude prices dropped to $67.72 per barrel, representing a $3.33 decline for the week and a $6.88 drop year-over-year. Several factors contributed to this downward pressure, including persistent concerns over global economic growth, a strengthening U.S. dollar that makes oil more expensive for international buyers, and a relative absence of geopolitical disruptions in major oil-producing regions.
Investment and Trading Considerations
The current market conditions present various opportunities and risks for investors and traders. Refining stocks, such as Valero ((NYSE:VLO)) and Marathon Petroleum ((NYSE:MPC)), may benefit from rising refinery activity and increased diesel production. Crude futures remain influenced by inventory trends, and further declines in stockpiles could provide price support if demand remains stable. Meanwhile, fuel prices could see adjustments, with gasoline inventories showing a minor increase, while distillate markets could experience tighter conditions despite higher output.
On this basis: The decline in crude inventories, rising refinery throughput, and shifting fuel production dynamics highlight a complex but tightening supply environment. However, macroeconomic uncertainties continue to exert downward pressure on oil prices, keeping WTI near recent lows.