US Oil Stocks Unexpectedly Rise as Refineries Slow Down

US crude oil reserves increased unexpectedly due to a significant slowdown in refinery activity, according to the US Energy Information Administration (EIA).

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

US commercial crude oil stocks recorded a rise of 3.9 million barrels during the week ending September 27, exceeding analysts’ expectations, who had anticipated a decline of 1.4 million barrels. This unexpected increase contrasts with the consensus established by Bloomberg and reflects a notable shift in the American energy sector.

This rise in inventories is primarily attributed to the slowdown in US refinery activity. Refining facilities operated at 87.6% of their capacity last week, compared to 90.9% the previous week, indicating the lowest utilization rate in five months. This deceleration is largely due to the oil companies entering their annual maintenance period, a common practice in October and February when demand is traditionally lower.

The reduction in refinery activity should theoretically lead to a decrease in refined product inventories. However, the stocks increased due to a drop in demand. The volumes of refined products delivered to the US market, an implicit indicator of demand, fell by 7% over a week. This decline was particularly pronounced for gasoline (-7%), distillates including diesel (-10%), and the propane and propylene category (-34%), largely destined for heavy industry.

Impact on the Oil Market

US gasoline stocks increased by 1.1 million barrels, while analysts had expected a more modest rise of 200,000 barrels. This increase exceeds expectations and could influence oil prices in the international market. In addition to the reduced activity of refineries, the rise in crude stocks can also be explained by a slight increase in imports (+2.7%), while exports remained relatively stable (-0.5%).

US crude oil production has reached its historic record level of 13.3 million barrels per day, compared to 13.2 million during the previous period. This recovery in production also contributes to the increase in stocks, despite a declining demand. The report from the US Energy Information Administration (EIA) had a significant impact on the market, which had been in a strong upward trend following the Iranian attack on Israel on Tuesday.

At 15:15 GMT, the price of West Texas Intermediate (WTI) for November delivery was up only 1.33%, reaching $70.76, after having risen by as much as 3.80% earlier in the day. This price volatility reflects the current uncertainties in the global oil market.

Outlook and Analysis

Matt Smith, an analyst at Kpler, explains that the refinery slowdown is an expected response to the maintenance season. “In October and February, refiners take advantage of a period of weaker demand to perform maintenance and repairs on their facilities,” he notes. This strategy helps maintain the operational efficiency of refineries while adjusting production according to seasonal demand fluctuations.

The decline in demand for refined products, especially gasoline and diesel, could also be linked to broader economic factors, such as slowdowns in certain industrial sectors or changes in consumer consumption habits. These dynamics will need to be closely monitored to anticipate future trends in the oil market.

Consequences for the US Economy

The increase in crude oil stocks and the drop in demand for refined products can have several repercussions on the US economy. On the one hand, higher stocks may put downward pressure on oil prices, which could benefit consumers by reducing the cost of gasoline and other derived products. On the other hand, a prolonged decline in demand could impact the profitability of refineries and potentially lead to adjustments in production operations.

The EIA report also highlights the importance of energy market stability for the overall economy. Effective stock management and quick adaptation of production and refining capacities are essential to respond to demand fluctuations and maintain market balance.

Reactions from Sector Players

Companies in the oil sector are closely monitoring these developments. Some may consider strategic adjustments to optimize their production and distribution based on new stock and demand data. Moreover, investments in refining infrastructure could be influenced by current trends, with a particular focus on operational efficiency and flexibility.

Additionally, national and international energy policies could be impacted by these market movements. Policymakers will need to evaluate the economic and environmental implications of these changes to develop strategies aimed at ensuring the resilience and sustainability of the energy sector.

Khartoum et Juba annoncent un mécanisme commun pour protéger les oléoducs transfrontaliers, sans clarifier le rôle des forces armées non étatiques qui contrôlent une partie des installations.
The Namibian government signed an agreement with McDermott to strengthen local skills in offshore engineering and operations, aiming to increase oil sector local content to 15% by 2030.
Nigeria deploys a 2.2 million-barrel floating storage unit funded by public investment, strengthening sovereignty over oil exports and reducing losses from theft and infrastructure failures.
Despite open statements of dialogue, the federal government maintains an ambiguous regulatory framework that hinders interprovincial oil projects, leaving the industry in doubt.
Canada’s Sintana Energy acquires Challenger Energy in a $61mn all-share deal, targeting offshore exploration in Namibia and Uruguay. The move highlights growing consolidation among independent oil exploration firms.
The 120,000-barrel-per-day catalytic cracking unit at the Beaumont site resumed operations after an unexpected shutdown caused by a technical incident earlier in the week.
An agreement was reached between Khartoum and Juba to protect key oil installations, as ongoing armed conflict continues to threaten crude flows vital to both economies.
Alnaft has signed two study agreements with Omani firm Petrogas E&P on the Touggourt and Berkine basins, aiming to update hydrocarbon potential in key oil-producing areas.
Import quotas exhaustion and falling demand push Chinese independent refineries to sharply reduce Iranian crude volumes, affecting supply levels and putting downward pressure on prices.
Serbian oil company NIS, partially owned by Gazprom, faces newly enforced US sanctions after a nine-month reprieve, testing the country's fuel supply chain.
US-based Chevron appoints Kevin McLachlan, a veteran of TotalEnergies, as its global head of exploration, in a strategic move targeting Nigeria, Angola and Namibia.
Lycos Energy finalises the sale of its Alberta assets for $60mn, planning an immediate $47.9mn cash distribution to shareholders and the launch of a share buyback programme.
Russian oil output moved closer to its OPEC+ allocation in September, with a steady rise confirmed by Deputy Prime Minister Alexander Novak.
Fuel shortages now affect Bamako, struck in turn by a jihadist blockade targeting petroleum flows from Ivorian and Senegalese ports, severely disrupting national logistics.
McDermott has signed a memorandum of understanding with PETROFUND to launch technical training programmes aimed at strengthening local skills in Namibia’s oil and gas sector.
The example of OML 17 highlights the success of an African-led oil production model based on local accountability, strengthening Nigeria’s position in public energy investment.
ExxonMobil has signed a memorandum of understanding with the Iraqi government to develop the Majnoon oil field, marking its return to the country after a two-year absence.
Crude prices rose following the decision by the Organization of the Petroleum Exporting Countries and its allies to increase production only marginally in November, despite ongoing signs of oversupply.
Cenovus Energy modifies terms of its acquisition of MEG Energy by increasing the offer value and adjusting the cash-share split, while reporting record third-quarter results.
Hungarian oil group MOL and Croatian operator JANAF are negotiating an extension of their crude transport agreement as the region seeks to reduce reliance on Russian oil.

All the latest energy news, all the time

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.