This morning, The U.S. Energy Information Administration (EIA) reported another large build of oil stockpiles. Crude inventories roses by 6.088 million barrels last week to a total of 427 million barrels, this represents the 4th consecutive week that oil inventory climbs up in the US. However, both Western Texas Intermediate (WTI) and Brent Crude futures were up this morning, largely due to concerns from the global energy crunch and surge of energy imports from China.
According to the latest Petroleum Status Report from EIA, gasoline inventories decreased by 2.0 million barrels last week, while distillate fuel inventories declined by only 24,000 barrels, virtually unchanged from last week, Propane/propylene inventories decreased by 0.6 million barrels last week.
At the same time, refinery input is slightly low compared to the previous week. U.S. crude oil refinery inputs averaged 15.1 million barrels per day last week which was 0.7 million b/d less than the previous week. Domestic oil production is up 10,000 barrels per day last week, largely from a slight change in Alaska, while oil basins in other states are unchanged comparing to the previous week. However, due to the damage of Hurricane Ida, the 4-week average U.S domestic production is still only 11,100 below the month of August.
It is a little bit confusing to understand the difference between oil inventory build versus gasoline inventory draw. But looking at the graph below on total US oil stock including the Strategic Petroleum Reserve(SPR), it sees a downtrend since the beginning of 2020, and far below 2018 level, this suggests that while the crude oil inventory has increased for many weeks, the SPR has been on a steady decline for a while, largely due to funding for government fiscal budget in the past. Therefore, demand itself may not be as bleak as it looks.
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