Crude Inventories Fall More Than Expected

Key Insights

• Crude inventories decreased by 6 million barrels from the previous week. 
• Domestic oil production grew from 12.6 million bpd to 12.7 million bpd. 
• Strategic Petroleum Reserve increased from 347.8 million barrels to 348.4 million barrels. 

On August 16, EIA released its Weekly Petroleum Status Report, which indicated that crude inventories declined by 6 million barrels from the previous week, compared to analyst consensus of -2.3 million barrels. At current levels, U.S. crude oil inventories are 1% below the five-year average for this time of the year.

Total motor gasoline inventories declined by 0.3 million barrels, while distillate fuel inventories grew by 0.3 million barrels. Crude oil imports averaged 7.2 million bpd, rising by 0.48 million bpd from the previous week.

U.S. continued to buy oil for the Strategic Petroleum Reserve, which increased from 347.8 million barrels to 348.4 million barrels.

Domestic oil production increased from 12.6 million bpd to 12.7 million bpd as producers reacted to higher oil prices.

WTI oil remained under pressure after the release of the EIA report. Currently, WTI oil is trying to settle below the $81 level. Oil traders stay focused on the disappointing news from China, which does not grow as fast as previously expected.

Brent oil is also losing ground, trading below the $85 level. China-related worries serve as the key negative catalyst for Brent oil. The steady increase in the U.S. domestic oil production may put additional pressure on the oil markets in the near term.

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