Crude inventories fell by 12.16 MMbbl last week, the largest draw since late July 2023, driven by increased exports and refinery demand, partially offset by a minor import decline. The SPR added 400 Mbbl, while unaccounted-for volumes dropped significantly, leading to a net rise in crude oil demand over supply by 2.425 MMb/d. This should support crude prices in the near term. Enjoy Independence Day and stay alert for potential impacts from Hurricane Beryl in the Gulf Coast.
Featured Articles
- Blog
One Piece at a Time - U.S. Crude Oil Supply/Demand Balances, Inventories and Pricing
Last week, crude oil prices dropped below $50/bbl, in part due to continued increases in U.S. crude oil inventories, and fell further over the next few days. Then yesterday, prices perked up by $1.14 to $48.86/bbl; again one of the factors was the weekly inventory number from the Energy Information Administration which showed inventories down by a fraction of a percentage point for the week. The market seems to react spontaneously to changes in that crude-stocks statistic. Up is bearish, down is bullish. These days even a very modest decline in inventories is bullish. But serious analysis requires a more detailed, more nuanced understanding of why crude oil inventories behave as they do. Were inventories driven up by higher production or lower refinery runs? By higher imports? By lower exports? The reasons behind the inventory change are more important than the change itself. Today we continue our series on the modeling of U.S. crude oil supply and demand, and the sourcing of input data used in those calculations.
- Analyst Insight
Refinery Input and Crude Production Back to Recent Highs
U.S. crude oil production and refinery inputs are back to their recent highs of 13.3 MMb/d and 17.1 MMb/d respectively, as the industry appears to have dodged any significant impact from Hurricane Beryl.
- Blog
Road to Nowhere, Part 2 - Oil Prices Have Moved Lower With SPR Releases, But Production Still Lags
The swift increases in crude oil and gasoline prices that followed Russia’s invasion of Ukraine in February — and the sanctions that were implemented soon thereafter — spurred a lot of concern that the U.S. and global economies would go into a tailspin. In response, government officials here and abroad turned to their strategic reserves as a way to quickly balance the market and rein in prices while buying time for additional oil production to come online. But U.S. production growth and rig activity have hit a wall since June, when releases from the Strategic Petroleum Reserve (SPR) started to pick up steam, reducing the prospects for a significant output increase this year. In today’s RBN blog, we examine the changes in the market since the major withdrawals were announced, how the hoped-for bridge to higher oil production has so far failed to materialize, and why it’s unlikely the government will turn to the SPR if prices spike again soon.
