U.S. commercial crude oil stocks experienced a significant decline last week, according to data released by the U.S. Energy Information Administration (EIA). Reserves dropped by 1.8 million barrels, a sharper decrease than analysts’ expectations of just one million barrels.
This decline is partly attributed to a steep fall in crude oil imports, which plunged by 21% over the week, reaching their lowest level in a month. At the same time, U.S. exports increased by 6.5%, further reducing available stock levels.
Refinery Capacities and Increased Demand
Refinery activity also contributed to the stock reduction. U.S. refineries operated at 90.5% of their capacity, slightly higher than the previous week’s 90.2%. This uptick allowed for greater crude oil consumption to meet the demand for refined products.
Another key indicator, the volume of refined products delivered to the U.S. market, rose by 3.5% during the same period. This rebound was particularly notable for kerosene (+19%) and products in the propane and propylene category (+128%), primarily used in industry.
U.S. Production Near Record Levels
Despite this stock decrease, U.S. oil production rebounded to 13.49 million barrels per day, up from 13.2 million barrels the previous week. This production level is close to the all-time high of 13.5 million barrels per day.
This increase in U.S. supply comes as energy market players express concerns about a potential imbalance between a possibly oversupplied market and a global demand that could slow in 2025.
Market Reactions
Curiously, the larger-than-expected stock decline, typically seen as a bullish signal for oil prices, failed to sustain market momentum. After an initial positive reaction, markets showed signs of weakness.
The price of West Texas Intermediate (WTI) crude, the U.S. benchmark, traded at $68.83 per barrel at 15:55 GMT, down slightly by 0.09%. This modest drop reflects concerns about rising production and its implications for the global oil market.
