Oil stocks in the United States experienced an unexpected decline last week, according to data released by the US Energy Information Agency (EIA) on Thursday. Commercial crude oil reserves fell by 3.8 million barrels on June 16, contrary to analysts’ expectations of a slight increase of 450,000 barrels. This surprising drop brings the current reserves to 463.3 million barrels.
In addition to the commercial reserves, the government also drew 1.7 million barrels from the strategic oil reserves (SPR), which currently amount to 350 million barrels. The drawdown on reserves was encouraged by a rebound in crude exports, lower imports, and continued buoyant refining activity, as explained by Matt Smith of Kpler.
The refinery utilization rate stood at 93.1%, slightly lower than the previous rate of 93.7%. Exports of crude oil increased by 1.2 million barrels per day to 4.5 million bpd, while imports fell by 220,000 barrels per day to 6.1 million bpd.
Gasoline stocks saw a slight increase of 0.5 million barrels, although this is lower than the average forecast of 800,000 barrels.
US crude production also experienced a slight decline, dropping from 12.4 million barrels per day to 12.2 million barrels per day compared to the previous week. However, demand for the week increased by half a million barrels per day to 20.9 million bpd.
Over a four-week period, deliveries of gasoline, kerosene, and distilled products remained stable compared to the same time last year, averaging at 19.99 million barrels per day, slightly higher than the 19.83 million barrels per day in 2022.
The unexpected reduction in crude oil inventories has further impacted oil prices, which were already down due to concerns about global demand. The barrel of Brent crude from the North Sea, listed on the InterContinentalExchange (ICE), lost 3.44% to $74.46 for delivery in August. Similarly, the barrel of West Texas Intermediate (WTI) for same-month delivery on the New York Mercantile Exchange (Nymex) slipped 3.72% to $72.53.
The decline in oil stocks has raised questions about the future direction of oil prices and the impact on global markets. Analysts will closely monitor the situation to assess the potential consequences for the energy sector and the broader economy.
(c) AFP
What factors, including the Delta variant and disruptions in oil production, could continue to affect global oil demand and keep oil prices volatile
Ercial crude oil reserves, the EIA data also revealed a drop in gasoline and distillate fuel inventories. Gasoline stocks decreased by 1 million barrels, while distillate fuel inventories fell by 800,000 barrels.
This unexpected decline in oil stocks comes amid increasing concerns about the demand for oil as the Delta variant of the COVID-19 virus continues to spread, leading to renewed lockdowns and travel restrictions in various parts of the world. These restrictions have dampened the recovery of global oil demand, putting downward pressure on oil prices.
The decline in oil stocks could also be attributed to disruptions in oil production caused by hurricanes in the Gulf of Mexico. According to the Bureau of Safety and Environmental Enforcement, nearly 20% of oil production in the Gulf was shut down on Thursday due to the arrival of Hurricane Elsa. This disruption in production could have contributed to the unexpected decline in oil stocks.
The unexpected drop in oil stocks raises questions about the future trajectory of oil prices. While some analysts argue that the decline in inventories could push prices higher, others believe that the ongoing concerns about the Delta variant and the potential for further lockdowns could continue to weigh on oil demand and keep prices volatile.
The EIA data also revealed an increase in US oil imports, with imports rising by 1.2 million barrels per day. This increase in imports could help offset the decline in domestic oil stocks to some extent.
Overall, the unexpected decline in oil stocks in the United States has raised concerns about the ongoing recovery of the oil market. With uncertainties surrounding the Delta variant and its impact on global oil demand, the future direction of oil prices remains uncertain.
This surprising decline in crude oil reserves is a reminder of the volatile nature of the industry. Analysts should consider the potential impact of unforeseen factors in their predictions.
This unexpected decline in crude oil reserves in the US is a clear reminder of the volatile nature of the energy market. Analysts have been caught off guard, highlighting the uncertainties and challenges surrounding oil production and reserves management.