The United States witnessed an increase in crude oil inventories during the week ending September 18, according to data released by the Energy Information Administration (EIA). This rise was accompanied by a decline in fuel stocks, primarily due to reduced refinery activity, especially in the Midwest region. The EIA reported that crude inventories increased by approximately 3 million barrels, reaching 426.4 million barrels. This growth contrasts with analysts' expectations of a decrease of around 641,000 barrels.
The increase in crude inventories was partly attributed to a significant drop in refinery operations. Specifically, refinery activity decreased by 519,000 barrels per day during the week, with utilization rates falling by 2.8 percentage points to 94%. The shutdown of Exxon Mobil's 275,000-barrel-per-day refinery in Joliet, Illinois, contributed to this decline, pushing the Midwest refinery utilization rate down from 100% in the previous week to 86%.
The EIA data also revealed a decline in distillate stocks, which include diesel and heating oil. These stocks decreased by 428,000 barrels to 107.4 million barrels, contrary to expectations of a 633,000-barrel decline. Additionally, diesel inventories in the US fell by 604,000 barrels to 96.36 million barrels, marking a 14% decrease compared to the five-year seasonal average.
The decline in fuel stocks, particularly diesel, has led to price increases. The average diesel price reached a record high, with the gallon price standing at approximately $6.5217 on Wednesday, up from $3.6933 the previous year. Conversely, gasoline inventories dropped by 1.7 million barrels to 206 million barrels, despite analysts predicting a 95,000-barrel increase.
The net import of crude oil into the US increased by 369,000 barrels per day during the week, as per EIA data. Following the release of this data, oil prices saw some fluctuation. Brent crude rose by $2.08 to $101.33 per barrel, while West Texas Intermediate (WTI) crude increased by 96 cents to $91.48 per barrel.
The unexpected rise in crude inventories and decline in fuel stocks have implications for the oil market. According to Matt Smith, an analyst at Kepler, the significant reduction in refining activity resulted in lower inventories of gasoline and distillates. This situation highlights concerns about refined products, as refineries need to process around 17 million barrels of crude per day to prevent continued declines in product inventories.
The trends in US oil inventories and refinery activity will likely influence future oil prices and market dynamics. As the global oil market continues to navigate through supply and demand challenges, the EIA's weekly inventory reports remain a crucial indicator for traders and analysts. Key points include: - US crude inventories rose by 3 million barrels. - Refinery activity declined, particularly in the Midwest. - Diesel and gasoline stocks experienced significant drops.
