Surprising Increase in Commercial Oil Reserves Despite Market Expectations – July 2023 Update

During the week ended July 7, commercial reserves rose by 5.9 million barrels, while analysts expected a drop of 50,000 barrels.

Commercial crude oil reserves rose sharply last week, according to figures released Wednesday by the US Energy Information Agency (EIA), a surprise for the market, which had expected a slight contraction.

During the week ended July 7, commercial inventories increased by 5.9 million barrels, while analysts expected a drop of 50,000 barrels, according to a consensus established by the Bloomberg agency.

This increase is due in particular to the fall in crude exports (-45% over one week), which fell to their lowest level since the beginning of January.

It is also linked to the sudden slowdown in American demand. Petroleum products delivered to the United States, an indicator that measures demand, fell by 12%, also touching a floor since the beginning of 2023.

The increase in commercial stocks can also be explained by the slight contraction of 400,000 barrels in strategic reserves.

Last salient factor, a major statistical adjustment, which caused the EIA to add 9.9 million barrels to the volumes arriving on the American market.

Most often, these modifications are intended to rectify statistical approximations in earlier periods.

This exogenous element, which has nothing to do with oil activity during the week in question, put the significant increase in commercial stocks into perspective.

In the green before the publication, prices remained up after the release of the EIA report.

Around 2:55 p.m. GMT, a barrel of American West Texas Intermediate (WTI) for delivery in August took 1.48%, to 75.94 dollars.

The increase in commercial reserves is all the more surprising given that the utilization rate of American refineries rose sharply, to 93.7%, against 91.1% over the previous period, the highest for a month.

Refinery activity was driven by exports of petroleum products, which came close to the absolute record for the United States, recorded in October.

On the production side, after rising to a post-pandemic peak, US crude volumes fell slightly, to 12.3 million barrels per day, from 12.4 previously.

2023-07-12 15:34:18


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