KEY POINTSÂ Â
- U.S. crude oil inventories hit the lowest levels in a year. Â
- Cushing hub stocks dropped significantly, nearing critical levels. Â
- Gasoline and distillate stocks saw a slight, smaller-than-expected rise. Â
According to the Energy Information Administration (EIA), U.S. crude oil inventories have fallen to their lowest point in a year, while fuel inventories have increased. Crude stockpiles dropped by 1.6 million barrels, bringing the total to 417.5 million barrels for the week ending September 13. This decline exceeded the analysts’ expectations, highlighting a significant shift in U.S. energy reserves.
Crude inventories hit yearly low
The dip in crude inventories marked the lowest levels seen since September 2023, with stocks in the Midwest hitting their lowest point since December 2014. At the Cushing, Oklahoma, delivery hub, inventories decreased by 2 million barrels, marking the 10th weekly decline in the past 11 weeks. These numbers have triggered concerns within the industry as stocks near critical levels.
“The drop in Cushing inventories is raising red flags, with levels approaching tank bottoms,” said Josh Young, Chief Investment Officer at Bison Interests. This concern reflects the broader implications of falling inventories for the U.S. energy sector, especially as the winter season approaches.
Oil futures and imports impacted
Oil futures pared earlier losses following the release of the EIA report, with Brent crude trading at $73.53 a barrel and U.S. West Texas Intermediate crude at $71.10 per barrel. According to Reuters, both benchmarks had experienced steeper declines earlier in the session before showing signs of recovery.
Net U.S. crude imports fell by 1.8 million barrels per day, driven partly by reduced port activity along the Gulf Coast due to Hurricane Francine. This disruption, combined with the EIA’s adjustment number, which tracks unaccounted crude, has led to fluctuations in the oil market.
Refinery crude runs also decreased by 282,000 barrels per day, with utilization rates dropping by 0.7 percent points to 92.1 percent of total capacity.
Fuel inventories see a modest rise
While crude inventories saw a significant drop, fuel stocks, including gasoline and distillate inventories, increased slightly. Gasoline stocks rose by 100,000 barrels to 221.6 million barrels, a smaller build than the 200,000 barrels anticipated.
Distillate stockpiles, which include diesel and heating oil, also climbed by 100,000 barrels, falling short of the expected 600,000-barrel rise.
The smaller-than-expected fuel inventory build had an immediate impact on gasoline and heating oil futures, both of which turned positive following the report.
