The U.S. Energy Information Administration (EIA) reported a significant increase in U.S. crude oil inventories for the week ending June 7, 2024. This 3.7 million barrel increase is in stark contrast to the forecasts of analysts, who expected a decrease of 1.5 million barrels, following the drop in crude oil inventories announced in March.
Increase in Imports
Crude oil imports jumped nearly 18% in a week, reaching a level not seen since August 2018. This substantial increase in imports was a key factor in the rise in inventories. At the same time, exports decreased by 29%, also contributing to the accumulation of crude oil reserves.
Domestic production also increased slightly, from 13.1 to 13.2 million barrels per day, closing in on the all-time high of 13.3 million. Despite this slight increase, US refineries continued to operate at very high capacity, using 95% of their capacities, a slight decline from 95.4% the previous week.
Slowdown in Demand
Demand for petroleum products in the United States fell 6% over the week. Although gasoline demand edged up 1%, reaching more than 9 million barrels per day, the “other products” category, which includes refined products used in the petrochemical industry, fell 28%. This decline in demand also played a role in the increase in inventories.
This publication had a notable impact on the oil market, slowing the rise in prices that had been observed until then. At 3:00 p.m. GMT, a barrel of West Texas Intermediate (WTI) for delivery in July was only up 0.56%, at $78.34, after reaching a maximum increase of almost 2%.
Market Outlook
Fluctuations in crude oil imports and exports, as well as variations in domestic demand, are crucial indicators for market participants. The increase in U.S. inventories could signal an upcoming adjustment in import or production policies to stabilize prices. Market observers will continue to monitor future EIA releases to assess short- and medium-term trends.
This rise in U.S. crude oil inventories, driven by increased imports and fluctuating domestic demand, highlights the complex dynamics of the oil market. WTI price reaction and potential energy policy adjustments will be key points to watch in the coming weeks.
