KEY POINTS
- Cushing crude stocks dropped to their lowest level since 2014.
- Fuel inventories, including gasoline and distillates, rose significantly.
- Canadian crude imports surged amid concerns over tariff threats.
U.S. crude oil stocks at the Cushing, Oklahoma, delivery hub plummeted to a decade-low last week, according to the Energy Information Administration (EIA). Meanwhile, fuel inventories soared, reflecting shifts in the oil market as the new year unfolds.
Crude inventories dropped by 959,000 barrels, reaching 414.6 million barrels in the week ending January 3. Stocks at Cushing specifically fell by 2.5 million barrels to 20 million barrels, marking their lowest level since October 2014.
According to Reuters, traders consider levels near 20 million barrels operationally critical, with challenges in moving barrels when stocks run low.
Crude oil supply faces seasonal challenges
Cushing’s significant drawdown is partially attributed to end-of-year trends. “The tanks are drained for tax reasons, but this level is extreme and problematic,” said Bob Yawger, director of energy futures at Mizuho in New York.
Analysts anticipate crude stocks will start replenishing as refineries ramp up maintenance activities in the coming weeks.
Crude futures extended losses following the report. Brent crude dropped 86 cents to $76.19 a barrel, while U.S. West Texas Intermediate crude declined 85 cents to $73.40.
Fuel inventories rise sharply
Fuel stocks rose notably, with gasoline inventories climbing by 6.3 million barrels to 237.7 million barrels, surpassing expectations for a 1.5-million-barrel increase.
Distillate inventories, which include diesel and heating oil, rose by 6.1 million barrels to 128.9 million barrels, far exceeding the predicted 600,000-barrel increase.
Refinery crude runs increased by 45,000 barrels per day, while utilization rates climbed to 93.3 Percent. Gulf Coast refiners reported their highest crude inputs since December 2018, according to the EIA.
Imports surge as Canadian supply strengthens
Net U.S. crude imports rose by 278,000 barrels per day to 3.35 million barrels per day, with imports from Canada hitting a record high.
The increase comes amid market speculation about potential tariffs under President-elect Donald Trump’s administration, which could reshape cross-border trade dynamics.
Analysts warn of potential market disruptions if product builds continue over the coming weeks, especially with cold weather potentially boosting heating oil demand.
