During the week ending January 6, commercial reserves increased by 19 million barrels, while analysts are betting on an average decline of 2 million barrels.
Weekly trade reserves of crude oil in the US were up sharply from last week, which was interrupted by the aftermath of a winter storm as the government virtually stopped drawing on its strategic reserves.
According to data released Wednesday by the US Energy Information Agency (EIA), commercial inventories rose by 19 million barrels in the week ending Jan. 6.
These data surprised analysts who were betting on an average drop in inventories of 2 million barrels, according to a consensus established by the Bloomberg agency.
A recovery in refining activity, hampered by Storm Elliott in late December, a sharp decline in exports and a decline in demand explain this solid rebound in crude inventories, which total 439.6 million barrels.
Furthermore, for the first time in nearly 18 months, the government has barely tapped into its strategic reserves, withdrawing just 800,000 barrels.
After drawing more than 200 million barrels of these reserves to counter rising crude oil prices, the US administration is trying to rebuild these strategic stocks which stand at 371.6 million barrels.
The market reacted to these data with an acceleration in the rise in oil prices.
The near cessation of use of strategic reserves has pushed prices up because this implies a reduction in supply.
At around 17:00 GMT, crude oil prices accelerated their rise. A barrel of North Sea Brent Brent for March delivery rose 3.11% to $82.59 and West Texas Intermediate (WTI) for February delivery gained 3.09% to $77.45.
“Sales of strategic reserves helped fill the supply gap last year, but now refiners are looking for an alternative offer. This is a contributing factor to rising prices as China opens up,” said Andy Lipow of Lipow Oil Associates.
According to him, stopping the use of strategic reserves could be worth an extra $5 to $7 a barrel.
Gasoline reserves also increased by 4.1 million barrels last week, more than analysts expected (+750,000).
Those of distillates (fuel oil, diesel) fell by 1.1 million barrels, close to analysts’ expectations.
Due to the cold weather, the refinery’s capacity utilization had dropped to 79.6% at the end of December, only to drop again last week to 84.1%, which “is still very low,” noted Andy Lipow.
“We also had a big build-up of gasoline inventories as people stayed home due to bad weather,” the analyst explained.
Overall, US crude production increased slightly to 12.2 million barrels per day (+100,000 barrels) last week. Exports halved to 2.1 million barrels per day.
As for demand, it decreased by 563,000 barrels per day to 17.6 million barrels per day.
