Crude Inventories Increased By 5.9 Million Barrels, Exceeding Analyst Expectations

Key Insights

• Crude inventories are 1% above the five-year average for this time of the year.
• Strategic Petroleum Reserve declined to new lows at 346.8 million barrels. 
• Domestic oil production decreased from 12.4 million bpd to 12.3 million bpd. 

On July 12, EIA released its Weekly Petroleum Status Report. The report indicated that crude inventories increased by 5.9 million barrels from the previous week, compared to analyst consensus of +0.5 million barrels. At current levels, crude oil inventories are approximately 1% above the five-year average for this time of the year.

Total motor gasoline inventories have slightly decreased from last week, while distillate fuel inventories increased by 4.8 million barrels. Crude oil imports declined by 1.2 million bpd, averaging 5.9 million bpd.

Strategic Petroleum Reserve declined from 347.2 million barrels to multi-decade lows at 346.8 million barrels. Domestic oil production decreased from 12.4 million bpd to 12.3 million bpd. In recent weeks, domestic oil production remained in the 12.2 million bpd – 12.4 million bpd range.

Oil markets remained close to session highs after the release of the EIA report. WTI oil settled near the $76.00 level, while Brent oil traded near $80.40.

From a big picture point of view, oil traders remain focused on the supply/demand balance in the oil markets. Russia and Saudi Arabia have recently announced production cuts, providing material support to oil prices.

In addition, the previous week was the planet’s hottest on record, driven by the El Nino weather pattern. Hot weather boosts demand for energy, which is bullish for oil prices.

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