Total U.S. commercial crude stocks increased by 3.46 MMbbl, marking the first inventory build in ten weeks. This rise was primarily driven by continued weakening demand, as the refinery maintenance season has reduced net input by 1.7 MMb/d since the beginning of the year. PADD 3 inventories rose by 4.2 MMbbl, partly due to an 830 Mb/d decline in exports and a 475 Mb/d drop in gross refinery input in the region. Conversely, PADD 4 experienced a relatively significant decrease of 600 Mbbl, the largest single-week drop in the Rockies since June 28, 2024, likely linked to a 110 Mb/d reduction in imports into the PADD, with only 280 Mb/d coming from Canada. Meanwhile, the U.S. Strategic Petroleum Reserve (SPR) grew by an additional 250 Mbbl as part of the January purchase.
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The Rise and Fall of Crude Supply - Shale Crude Production, Inventories and Imports
It looks like a combination of shale crude oil production and inventory drawdowns have been backing out crude oil imports over the past two months. Gulf Coast refineries are leading the way to crank up utilization, increase diesel exports and pull crude oil inventories down from the stratosphere. A lot of this activity seems to be bypassing Cushing. Meanwhile the Gulf Coast is at the center of two big events this week – a tropical storm and a huge refinery fire. Today we continue our analysis of crude inventories.
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.
