Crude Inventories Exceed Estimates, WTI Oil Pulls Back From Session Highs

Key Insights

• Crude inventories grew by 7.6 million barrels from the previous week. 
• Gasoline inventories declined by 1.9 million barrels. 
• Domestic oil production increased but the headline number remained unchanged at 12.3 million bpd due to rounding. 

Domestic Oil Production Grew By 100,000 Bpd

On February 23, EIA released the Weekly Petroleum Status Report, which indicated that crude inventories increased by 7.6 million barrels from the previous week. Analysts expected that crude inventories would grow by 2.1 million barrels. Crude inventories have been growing for 9 weeks in a row.

Total motor gasoline inventories declined by 1.9 million barrels, while distillate fuel inventories grew by 2.7 million barrels. U.S. crude oil imports increased by 94,000 bpd from the previous week.

Strategic Petroleum Reserve remained unchanged at multi-decade lows at 371.6 million barrels. Domestic oil production increased by roughly 100,000 bpd, but this increase did not get into the headline number of 12.3 million bpd due to rounding. The increase in domestic oil production is a bearish catalyst for oil markets as it shows that oil producers are ready to boost production at current levels.

WTI Oil Pulls Back From Session Highs

WTI oil declined below the $75.50 level after the release of the EIA report. Crude inventories continue to grow at a robust pace, which is bearish for oil markets. Analysts have underestimated the growth of crude inventories, and it looks that demand is weaker than analysts expected. In addition, domestic oil production has started to grow, which is also bearish for WTI oil.

Brent oil has also moved lower after the release of the EIA report. It should be noted that Brent oil continues to trade at a significant premium to WTI oil. Currently, Brent oil has settled in the $81.50 – $82.00 range.

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