US Crude Oil Inventories Decline Sharply, Strategic Petroleum Reserve Reaches 40-Year Low
According to data from the American Petroleum Institute (API), US crude oil inventories have experienced a significant decrease of 6.072 million barrels during the week ending June 26. This figure represents a substantially larger decline compared to the previous week's reduction of 765,000 barrels, indicating a robust recovery in crude oil demand.
Although commercial crude oil inventories (excluding the Strategic Petroleum Reserve - SPR) have been declining continuously for over two months, with a total of 59.4 million barrels withdrawn over the past eleven weeks, the total US crude oil inventory has only decreased by 8 million barrels this year. This has been offset by withdrawals from the SPR.
Strategic Petroleum Reserve Reaches Record Low
With an additional withdrawal of 5.5 million barrels during the week ending June 26, the total oil in the SPR now stands at only 325.7 million barrels - a level lower than even the 2023 low recorded during a major withdrawal by the Biden administration and the lowest in over four decades. The current SPR inventory is 399 million barrels below maximum capacity.
| Indicator | Week Ending June 26 | Previous Week Change | 11-Week Trend |
|---|---|---|---|
| Crude Oil Inventory (million barrels) | -6.072 | -0.765 | -59.4 |
| Gasoline Inventory (million barrels) | -2.106 | +1.238 | - |
| Distillate Inventory (million barrels) | +2.9 | +1.447 | - |
| Cushing Inventory (million barrels) | +0.503 | -0.982 | - |
US Oil Production Increases
According to the latest data from the US Energy Information Administration (EIA), US oil production has risen to 13.819 million barrels per day (bpd) during the week ending June 19, up from 13.806 million bpd the previous week and 384,000 bpd higher than the same period last year.
Oil Prices Continue to Decline
As of 4:36 PM ET on Tuesday, Brent crude was trading lower in the day at $73.40 per barrel (-0.69%), following partial resumption of flows from the Strait of Hormuz. WTI crude also decreased by $0.69 per barrel (-0.98%) to $70.06 per barrel, approximately $3 lower than the previous week.
| Oil Type | Current Price (USD/barrel) | Daily Change | Weekly Change |
|---|---|---|---|
| Brent Crude | 73.40 | -0.69% | - |
| WTI Crude | 70.06 | -0.98% | ~-3.00 |
Fuel Inventories
Gasoline inventories decreased by 2.106 million barrels during the week ending June 26, after increasing by 1.238 million barrels in the previous week. According to the latest EIA data, gasoline inventories were 5% below the five-year average for this time in the previous week.
Distillate inventories (diesel, heating oil) increased by 2.9 million barrels, after rising by 1.447 million barrels in the previous week. The latest EIA data shows distillate inventories were 10% below the five-year average for the week ending June 19.
Inventories at Cushing - the storage hub for WTI crude oil futures contracts - increased by 503,000 barrels in the reporting period, after decreasing by 982,000 barrels in the previous week.
The sharp decline in crude oil inventories coupled with continued production increases indicates strong recovery in crude oil demand following a previous period of price declines. However, the continued substantial withdrawals from the SPR and its record low levels may create pressure on the market in the long term if not replenished in a timely manner with appropriate strategies.
The combination of declining crude oil inventories, below-average gasoline inventories, and increasing production could create upward price pressure on oil in the short term, particularly if flows from the Strait of Hormuz continue to experience disruptions.