Global Oil Market Analysis: US Inventory Data and Price Trends
The global oil market is closely monitoring US inventory data as the American Petroleum Institute (API) released its latest weekly report. The figures show significant fluctuations in crude oil inventories, strategic reserves, and production levels, all impacting global oil prices.
Crude Oil Inventory Data
According to API estimates, US crude oil inventories decreased by 564,000 barrels in the week ending July 10. The previous week saw a decline of 399,000 barrels. While commercial crude oil inventories (excluding SPR) have been declining for three consecutive months, with a total of over 60 million barrels withdrawn over the past 12 weeks, the total US crude oil inventory has only decreased by 9.2 million barrels so far this year, according to API data.
This decline has been tempered by withdrawals from the Strategic Petroleum Reserve. Below is a summary of crude oil inventory fluctuations:
| Period | Inventory Change (barrels) | Comparison to Previous Week |
|---|---|---|
| Week ending July 10 | -564,000 | Accelerated decline |
| Week ending July 3 | -399,000 | - |
| 12-week period | -60,000,000 | Continuous downward trend |
| Year to date | -9,200,000 | Moderate decline |
Strategic Petroleum Reserve (SPR)
For the week ending July 10, an additional 2.99 million barrels were withdrawn from the SPR, bringing the total SPR inventory to 316.5 million barrels—lower than the 2023 low reached during the Biden administration's large-scale oil release and the lowest level in over 43 years.
Current SPR inventory is below the maximum capacity of 415 million barrels. It's important to note that the minimum operational level recognized for oil in the SPR is between 250-300 million barrels, below which the reserve may face difficulties in pumping and handling oil effectively.
US Oil Production
To meet demand, US oil production has increased. Production in the week ending July 3 rose to 13.860 million barrels per day. This figure increased from 13.810 million barrels per day in the previous week and is up 475,000 barrels per day from a year ago.
Oil Price Trends
At 4:04 PM ET on Tuesday, Brent was trading higher in the day at $85.17 per barrel (up 2.24%) as US/Iran tensions escalated once again. WTI was also up in the day, rising $1.50 per barrel (1.92%) to $79.64.
| Oil Type | Price (USD/barrel) | Change (%) | Primary Driver |
|---|---|---|---|
| Brent | 85.17 | +2.24% | US/Iran tensions |
| WTI | 79.64 | +1.92% | US/Iran tensions |
Gasoline and Distillate Inventories
Gasoline inventories decreased this week, falling by 1.664 million barrels in the week ending July 10. The previous week saw a decrease of 2.929 million barrels. According to the latest data from the US Energy Information Administration (EIA), last week's gasoline inventory was 6% lower than the five-year average for the same period.
Distillate inventories, however, increased by 2.3 million barrels, after declining by 1.801 million barrels in the previous week. The latest EIA data shows distillate inventory was 12% lower than the five-year average as of the week ending July 3.
Cushing Inventory
Cushing inventory—the inventory held at the trading hub for WTI crude futures contracts—increased by 238,000 barrels in the reporting period, after declining by 69,000 barrels in the previous week.
Summary of Inventory Changes for Week Ending July 10
| Product Type | Weekly Change (million barrels) | Comparison to 5-Year Average |
|---|---|---|
| Crude Oil | -0.564 | - |
| Gasoline | -1.664 | -6% |
| Distillate | +2.3 | -12% |
| Cushing | +0.238 | - |
Conclusion
The oil market is in a state of tension with declining crude oil inventories being offset by SPR withdrawals. Current SPR inventory levels have reached a 43-year low, raising concerns about long-term energy security. US oil production is increasing to meet demand, but geopolitical tensions, particularly between the US and Iran, continue to impact oil prices.
The fact that both gasoline and distillate inventories are below the five-year average indicates strong consumption demand, while the slight increase in Cushing inventory may suggest relative stability in WTI crude oil distribution.
By Julianne Geiger for Oilprice.com
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