U.S. crude oil inventories experienced a significant increase last week, driven by softer demand resulting from ongoing refinery maintenance, according to the Energy Information Administration (EIA). The rise in crude stockpiles was accompanied by unexpected increases in gasoline inventories, while distillate stocks saw a decline.
Key Highlights:
Crude Inventory Increase:
Crude inventories rose by 8.7 million barrels, reaching 423.8 million barrels for the week ending January 31.
This increase surpassed analysts’ expectations, which had predicted a rise of only 2 million barrels.
Cushing Hub Stocks:
Stocks at the Cushing, Oklahoma delivery hub fell by 34,000 barrels during the same period.
Market Reaction:
Oil futures extended their losses following the larger-than-expected inventory build.
As of 11:03 a.m. EST, global benchmark Brent futures were trading at $74.95 a barrel, down $1.25, while U.S. West Texas Intermediate (WTI) was $1.20 lower at $71.50 a barrel.
Refinery Operations:
According to John Kilduff, a partner at Again Capital, refiners are currently experiencing slack demand for gasoline, prompting them to enter maintenance mode.
Refinery crude runs increased by 160,000 barrels per day, with utilization rates rising by 1% to 84.5% of total capacity.
Gasoline Inventory Changes:
Gasoline inventories rose by 2.2 million barrels, totaling 251.1 million barrels, surpassing analysts’ expectations of a 525,000-barrel build.
The four-week average for gasoline demand stood at 8.26 million barrels per day (bpd), slightly down from 8.28 million bpd during the same period last year.
Regional Insights:
East Coast gasoline inventories reached their highest level since January 2022 last week.
Net U.S. crude imports fell by 178,000 barrels per day.
International Trade Dynamics:
Imports from Mexico hit a record low as U.S. President Donald Trump threatened a 25% tariff on shipments from the country, although he later delayed the tariffs by one month.
Conversely, imports of oil from Libya rose to their highest level since October 2010.
Distillate Stockpile Decline:
Distillate stockpiles, which include diesel and heating oil, fell by 5.5 million barrels to 118.5 million barrels, compared to expectations for a 1.5 million-barrel drop.
Product supplied of distillates reached its highest level since January 2022, with a four-week demand average of 4.26 million bpd, the highest since March 2022.