The United States experienced a significant surge in crude oil stockpiles last week, the most significant increase in eight months, as crude exports decreased and oil refineries slowed their processing due to maintenance. During the week ending October 6, the US crude inventory balance increased by 10.176 million barrels, marking the most substantial weekly rise since mid-February when it experienced a 16.283 million barrel increase. In the previous week, ending September 29, there was a draw of 2.224 million barrels, in contrast to the expectations of industry analysts who predicted a 1.4 million barrel draw.
However, even more remarkable than the surge in crude inventory was the Energy Information Administration’s (EIA) estimate of crude production for the same week. The EIA reported that crude production reached 13.2 million barrels per day, marking a 300,000 barrel per day increase from the prior week. This is the highest government estimate of crude production ever recorded, surpassing the previous peak of 13.1 million barrels per day just before the onset of the COVID-19 pandemic in March 2020, which severely impacted crude demand.
The EIA has been consistently estimating higher crude production for the United States in recent months, citing increased output efficiency in the US shale oil basin, despite a reduction in the number of active oil rigs.
The significant increase in crude stockpiles can be attributed to the sharp drop in exports and reduced refinery operations due to maintenance. Crude exports fell by nearly 2 million barrels per day, declining from 4.956 million barrels per day during the week ending September 29 to 3.067 million barrels per day. Earlier in the year, the EIA reported that crude exports reached a record high of nearly 4 million barrels per day.
Additionally, the processing of crude oil into fuel and other products declined by nearly 2%, resulting in a processing rate of 85.7% as refineries underwent maintenance. These factors, lower exports and reduced refinery runs, led to the substantial increase in crude stockpiles, according to industry experts.
While crude oil stocks saw a notable increase, gasoline inventories experienced a decrease last week, following the significant build in the previous week. Gasoline stockpiles decreased by 1.313 million barrels, which was contrary to the anticipated drop of 1.0 million barrels and the prior week’s increase of 6.481 million barrels. Gasoline is a prominent fuel product in the United States.
Distillate inventories also declined by 1.837 million barrels last week, surpassing the expected 1.0 million barrel decrease and adding to the prior week’s drop of 1.269 million barrels. Distillates are refined into products like heating oil, diesel for various modes of transportation, and jet fuel.
The energy industry is witnessing remarkable shifts in crude oil production and stockpiles, further emphasizing the impact of exports and refinery operations on these dynamics.
