Increase in crude oil and product inventories is exerting pressure on the recovering prices
According to The American Petroleum Institute (API), crude oil inventories in the United States increased by 1.96 million barrels for the week ending September 13. This rise was contrary to analysts’ expectations, who had predicted a decrease of 100,000 barrels.
In the preceding week, the API had reported a reduction of 2.79 million barrels in crude inventories. Year-to-date, crude oil inventories are down by 10.9 million barrels compared to the beginning of the year, as per API data. On Tuesday, the US Department of Energy (DoE) announced that crude oil inventories in the Strategic Petroleum Reserve (SPR) rose by 0.6 million barrels as of September 13, bringing the total to 380.6 million barrels. This represents an increase of nearly 34 million barrels from the multi-decade low recorded last summer, although it remains 254 million barrels lower than the level when President Biden assumed office.
Oil prices experienced an uptick on Wednesday in anticipation of the API data release. As of 2:31 PM ET, Brent crude was trading at $73.62, up $0.87 (1.20%) for the day, reflecting an increase of nearly $4 from the previous week. The U.S. benchmark, WTI, also saw a rise of $1.07 (+1.53%) to $71.16, marking an increase of nearly $5 per barrel since last Tuesday, as the market awaits a decision from the Federal Reserve regarding interest rates. Gasoline inventories increased by 2.34 million barrels this week, effectively offsetting the 513,000-barrel decrease observed last week. Currently, gasoline inventories are 1% below the five-year average for this period, according to the latest data from the EIA. Distillate inventories rose by 2.3 million barrels, building on the previous week’s smaller increase of 191,000 barrels. As of the week ending September 6, distillates were approximately 8% below the five-year average, according to the latest EIA data. Cushing inventories (Cushing’s strategic position as a major hub in oil supply led to WTI’s development as a significant physical market price reference or benchmark for over three decades ) experienced another significant draw, with a decrease of 1.4 million barrels, as reported by API, following a 2.6-million-barrel draw from the prior week.