Inventory Changes: A Mixed Signal for Oil Markets
According to the latest Weekly Petroleum Status Report (WPSR) released by the U.S. Energy Information Administration (EIA), U.S. commercial crude oil inventories (excluding the Strategic Petroleum Reserve) increased by 8.7 million barrels last week, reaching 423.8 million barrels. Despite this rise, total crude inventories remain 5% below the five-year average for this time of year. The increase in stockpiles suggests weaker refinery demand and higher imports, adding slight downward pressure to oil prices.
Gasoline and Distillate Fuel Stock Trends
Motor gasoline inventories rose by 2.2 million barrels, with total stocks reaching 251.1 million barrels, keeping them slightly above the five-year seasonal average. However, finished gasoline stocks declined, while blending components increased, indicating shifts in refining and production strategies. Meanwhile, distillate fuel inventories, which include diesel and heating oil, dropped significantly by 5.5 million barrels, leaving them 12% below the five-year average. This sharp drawdown reflects strong demand for industrial and transport fuel, potentially putting upward pressure on diesel prices.
Imports, Refinery Utilization, and Production
US crude oil imports averaged 6.9 million barrels per day, marking an increase of 467,000 barrels per day compared to the previous week. Over the last four weeks, imports have averaged 6.6 million barrels per day, which is 2.8% higher than the same period last year. Refinery utilization stood at 84.5%, with crude oil inputs at 15.3 million barrels per day, reflecting a 159,000-barrel increase from the prior week. Gasoline and distillate fuel production saw minor fluctuations, with gasoline output at 9.2 million barrels per day and distillate production at 4.6 million barrels per day.
Price Movements and Market Reaction
Oil prices reacted modestly to the latest inventory data. West Texas Intermediate (WTI) crude oil settled at $72.84 per barrel, down $2.13 from the previous week. Meanwhile, gasoline and diesel prices showed mixed trends: the average national gasoline price dropped to $3.08 per gallon, while diesel fuel prices inched up to $3.66 per gallon, reflecting ongoing supply constraints in distillate fuels.
Market Outlook: What to Expect Next?
The increase in crude oil inventories combined with higher imports suggests near-term downward pressure on prices, particularly if refinery demand remains subdued. However, declining distillate inventories may keep diesel prices elevated, supporting a bullish case for refined products. Traders will also be closely monitoring OPEC+ supply decisions and macroeconomic indicators, including potential shifts in Federal Reserve policy, which could influence oil demand.
In the coming weeks, market volatility is likely to persist, with supply-demand dynamics and geopolitical factors playing a key role in shaping oil price movements. Investors should watch for further developments in refinery activity and global trade patterns to gauge the next directional move in crude and petroleum product prices.