EIA Report Shows That U.S. Has Started Buying Oil For Reserves

Key Insights

• Crude inventories grew by 5.9 million barrels from the previous week. 
• Domestic oil production increased from 12.2 million bpd to 12.6 million bpd as producers reacted to higher oil prices. 
• Strategic Petroleum Reserve grew from 346.8 million to 347.8 million as U.S. has started buying oil for reserves. 

On August 9, EIA released Weekly Petroleum Status Report, which indicated that crude inventories increased by 5.9 million barrels from the previous week. Analysts expected that crude inventories would grow by 0.57 million barrels. At current levels, U.S. crude oil inventories are slightly below the five-year average for this time of the year.

Total motor gasoline inventories declined by 2.7 million barrels, while distillate fuel inventories decreased by 1.7 million barrels. Crude oil imports averaged 6.7 million bpd, in line with the previous week.

The report highlighted strong growth in domestic oil production, which increased from 12.2 million bpd to 12.6 million bpd.  Rising oil prices provided material support to domestic oil production.

Strategic Petroleum Reserve increased from 346.8 million barrels to 347.8 million barrels, which means that U.S. has finally started to buy oil for its strategic reserves. At current levels, SPR remains extremely close to multi-decade lows.

WTI oil tested new highs near the $84.50 level after the release of the EIA report. U.S. has started to buy oil into SPR, so the tight market has a new buyer. Brent oil tested the $87.50 level. The general market sentiment remains bullish as traders ignore resession worries and focus on the recent production cuts from Saudi Arabia and Russia.

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