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Surprise Crude Inventory Spike Slams Oil Prices
Crude oil inventories in the United States rose by a shocking 10.9 million barrels for the week ending October 4, according to The American Petroleum Institute (API). Analysts had expected a build of 1.95 million barrels.
For the week prior, the API reported a 1.5-million-barrel decrease in crude inventories.
So far this year, crude oil inventories have slumped by just 5 million barrels since the beginning of the year, according to API data.
On Tuesday, the Department of Energy (DoE) reported that crude oil inventories in the Strategic Petroleum Reserve (SPR) rose by 0.3 million barrels as of October 4. SPR inventories are now at 382.9 million barrels, a figure that reflects an increase of more than 35 million from its multi-decade low last summer, yet 252 million from when President Biden took office. At the current rate of replenishment, it will take more than five years to return to January 2020 levels.
Oil prices shrugged off what is now becoming rather for the markets—threats of a possible supply shock in the wake of continued conflict in the Middle East. WTI and Brent fell sharply ahead of the API data release as traders took handsome profits from the recent oil rally and their kept their eyes on soft demand from China.
At 3:39 pm ET, Brent crude was trading down $3.46 (-4.28%) on the day at $77.47—a nearly $4 per barrel gain from this time last week. The U.S. benchmark WTI was also trading sharply down on the day by $3.29 (-4.26%) at $73.85—a $3.70 per barrel gain from this time last Tuesday.
Gasoline inventories fell this week by 557,000 barrels, compared to last week’s 900,000-barrel increase. As of last week, gasoline inventories are 1% below the five-year average for this time of year, according to the latest EIA data.
Distillate inventories fell by 2.59 million barrels, on top of last week’s 2.7-million-barrel decrease. Distillates were already about 8% below the five-year average as of the week ending September 27, the latest EIA data shows.
Cushing inventories—the benchmark crude stored and traded at the key delivery point for U.S. futures contracts in Cushing, Oklahoma, rose by 1.359 million barrels, according to API data, on top of the 700,000-barrel build of the previous week. Inventories at Cushing are now under 24 million barrels.
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