Crude oil inventories in the United States experienced another decrease last week, according to the U.S. Energy Information Administration (EIA). This reduction was driven by a surge in refinery activity across the country.
The decline amounted to a net 3.4 million barrels for the week ending July 5th. This contradicted analyst expectations, which had projected an average increase of one million barrels, based on a consensus compiled by Bloomberg.
Production and Trade
This reduction is particularly noteworthy given that, during the same week, U.S. crude production increased to 13.3 million barrels per day (up from 13.2 million barrels per day). This figure matches a historical record previously set earlier this year.
The decrease in commercial inventories also occurred while exports fell by 9% over the week, and imports rose by 3%.
Refinery Activity
However, these factors were more than offset by the ramp-up of U.S. refineries, which operated at 95.4% capacity, compared to only 93.5% during the previous week.
This level of activity in U.S. refineries had not been seen at this time of year for six years.
Strategic Reserves and Demand
Alongside the decrease in commercial inventories, strategic reserves (SPR) increased by 500,000 barrels.
After drawing on these SPR to alleviate crude oil prices, the U.S. government is seeking to gradually replenish them. Since July 2023, it has repurchased over 26 million barrels.
On the demand side, refined products delivered to the U.S. market experienced a slight decline (-1.6%), but gasoline volumes remained well above the symbolic threshold of nine million barrels per day (9.4).
Only distillates (-7%), a category that includes diesel, and refined products intended for industry (-6%) showed a decrease.
Holiday Impact
Matt Smith, an analyst at Kpler, attributes the decline in commercial crude inventories and gasoline reserves (-2 million barrels) to the extended July 4th weekend. This national holiday in the U.S. traditionally marks a peak period for road travel.
The EIA’s publication allowed oil prices to gain some ground after stagnating earlier in the session. Around 3:00 PM GMT, the price of a barrel of West Texas Intermediate (WTI) for August delivery rose by 0.71%, to $81.99.