U.S. Crude Oil Inventories Decreased 5.8M vs 1.6M Expected

by Ike Obudulu Posted on August 22nd, 2018

Washington D.C., USA: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.8 million barrels from the previous week. At 408.4 million barrels, U.S. crude oil inventories are at the five year average for this time of year.

Economists consensus had forecast drop of 1.6 million barrels for the week ended August 17.

U.S. crude oil refinery inputs averaged 17.9 million barrels per day during the week ending August 17, 2018, which was 89,000 barrels per day less than the previous week’s average. Refineries operated at 98.1% of their operable capacity last week. Gasoline production decreased last week, averaging 10.2 million barrels per day. Distillate fuel production increased last week, averaging 5.4 million barrels per day.

U.S. crude oil imports averaged 7.5 million barrels per day last week, down by 1,496,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 8.1 million barrels per day, 2.2% less than the same four-week period lastyear.

Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 817,000 barrels per day, and distillate fuel imports averaged 145,000 barrels per day.

Total motor gasoline inventories increased by 1.2 million barrels last week and are about 6% above the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 1.8 million barrels last week and are about 7% below the five year average for this time of year. Propane/propylene inventories decreased by 0.9 million barrels last week and are about 13% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 2.5 million barrels last week.

Total products supplied over the last four-week period averaged 20.8 million barrels per day, down by 1.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.5 million barrels per day, down by 1.5% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the past four weeks, down by 7.7% from the same period last year. Jet fuel
product supplied was up 3.7% compared with the same four-week period last year.

Market Reaction

West Texas Intermediate oil pared gains in North American trade on Wednesday, after data showed that while oil supplies in the U.S. registered a much larger than expected draw, gasoline stockpiles unexpectedly increased and distillate inventories rose more than expected.

Crude oil for October delivery on the New York Mercantile Exchange rose $1.13, or 1.72%, to trade at $66.97 a barrel by 10:33 AM ET (15:33 GMT) compared to $67.27 ahead of the report.

The ICE Futures Exchange in London, Brent oil for October delivery traded up $1.78, or 2.45%, to $74.41 by 10:39 AM ET (15:39 GMT), compared to $74.12 before the release.

Meanwhile, Brent’s premium to the WTI crude contract stood at $6.90 a barrel by 10:39AM ET (15:39GMT), compared to a gap of $6.79 by close of trade on Tuesday.

Why Markets Care About crude oil inventories (Crude Stocks, Crude Levels)

Crude Oil Inventories (Crude Stocks, Crude Levels) measures change in the number of barrels of crude oil held in inventory by commercial firms during the past week

It is released released weekly, 4 days after the week ends by the Energy Information Administration (EIA)

There is no consistent effect as there are both inflationary and growth implications. While this is a US indicator, it most affects the loonie due to Canada’s sizable energy sector.

Crude oil inventories (crude stocks, crude levels) is the primary gauge of supply and demand imbalances in the market, which can lead to changes in production levels and price volatility.

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