KEY POINTS
• U.S. crude inventories increased by 5.5 million barrels, driven by higher imports.
• Gasoline stocks rose unexpectedly by 900,000 barrels as refineries ramped up production.
• Distillate stockpiles fell by 1.1 million barrels, less than expected.
Reuters published in a recent article that the U.S. crude oil inventories saw a sharp increase last week, driven by a rise in imports, while gasoline stocks grew unexpectedly as refineries ramped up production after seasonal maintenance, according to data from the Energy Information Administration (EIA).
Crude stocks rise sharply, Cushing hub experiences profit decline
In the week ending October 18, U.S. crude inventories climbed by 5.5 million barrels to 426 million barrels, far exceeding analysts’ expectations of a 270,000-barrel rise. However, crude stocks at the Cushing, Oklahoma delivery hub saw a modest drop of 346,000 barrels.
The unexpected rise in crude inventories was largely due to a recovery in imports following disruptions from Hurricane Milton, which had previously caused a 2.2 million-barrel drawdown. Net U.S. crude imports surged by 913,000 barrels per day to 2.3 million barrels per day last week, while exports fell slightly by 11,000 barrels per day to 4.11 million barrels per day.
“The large crude oil inventory build this week is balancing out last week’s drop, driven by a rebound in crude oil imports post-hurricane,” said Andrew Lipow, president of Lipow Oil Associates.
Refineries bounce back, gasoline stocks climb
Refinery crude runs increased by 329,000 barrels per day, with refinery utilization rates rising for the second consecutive week, reaching 89.5% of total capacity. Analysts expect this trend to continue as refineries return to full operation after fall maintenance.
“We’re seeing refineries coming back online after their seasonal maintenance, which has led to an increase in utilization rates and a rise in gasoline production,” said Matt Smith, an analyst at ship tracking firm Kpler.
As refineries ramped up production, gasoline stocks unexpectedly rose by 900,000 barrels to 213.6 million barrels, defying expectations of a 1.2 million-barrel draw. U.S. gasoline futures fell in response to the report.
Distillate stocks fall, but smaller than expected
Distillate stockpiles, which include diesel and heating oil, declined by 1.1 million barrels to 113.8 million barrels, a smaller drop than the anticipated 1.7 million-barrel draw. Despite this, U.S. heating oil futures extended losses following the data release.
While the increase in gasoline stocks was unexpected, the return of refineries to normal operations is likely to contribute to greater production levels in the coming weeks. However, analysts warn that rising inventories may put downward pressure on crude and gasoline prices in the short term.
