Recent figures released by the U.S. Energy Information Administration (EIA) show an increase in U.S. crude oil inventories of 3.6 million barrels for the week ending June 21. This increase contrasts sharply with analysts’ forecasts, who were expecting a drop of 2.8 million barrels, according to a Bloomberg consensus.
TheEIA study shows that the discrepancy can be explained in part by a reduction in activity at US refineries, which operated at 92.2% of capacity last week, compared with 93.5% previously. This is the third consecutive drop in their activity, reflecting a worrying trend for the sector.
Refinery slowdown and weather conditions
According to Kpler analyst Matt Smith, the decline in oil exports, which fell 11% in one week, is attributable to unfavorable weather conditions in the Gulf of Mexico. The first tropical storm of the season, named Alberto, hit part of Texas, disrupting shipping traffic.
At the same time, crude imports also fell by 6%, despite an increase in oil imports a few weeks ago, partially offsetting the drop in exports. However, this dynamic has contributed to the build-up of crude oil inventories on American soil.
Reduced domestic demand
The EIA report also indicates a contraction in refined product volumes delivered to the US market, down 1.8%. This decline is an implicit indicator of demand for petroleum products in the United States. Gasoline volumes suffered particularly badly, dropping 4.4% in one week to below the symbolic threshold of nine million barrels per day.
Lower volumes also affected kerosene and distillates, including diesel, which fell by 1.2% and 11.1% respectively. Gasoline inventories, meanwhile, rose by 2.7 million barrels, against a reduction of 1.5 million barrels forecast by analysts.
Outlook and market impact
Despite this increase in inventories, Matt Smith is forecasting a reduction in gasoline supplies for the coming week, ahead of the long weekend of July 4th, a national holiday in the United States which is generally marked by a rise in fuel consumption.
Crude oil production remained stable at 13.2 million barrels per day. However, the release of these figures by the EIA had an immediate impact on oil prices, which fell back after initially rising. At 15:05 GMT, West Texas Intermediate (WTI) for August delivery was down 0.37% at $80.53 a barrel.
This situation highlights the challenges facing the US oil market, between fluctuations in demand, disruptive weather conditions and adjustments in refining activities. The trend over the next few weeks will be crucial in determining whether this rise in inventories continues, or whether a recovery in demand will rebalance the market.
