US Distillate Stocks Continue to Fall As Crude Inventories Build

The American Petroleum Institute estimated that U.S. crude oil inventories rose by 1.019 million barrels in the week ending September 25, a result that diverged from market expectations for a 1.9 million barrel draw. The API also reported that the prior week saw crude inventories increase by about 1.786 million barrels. Over the last 24 weeks commercial crude stocks excluding the Strategic Petroleum Reserve have declined by 38 million barrels, though total U.S. crude supplies remain up roughly 13 million barrels so far this year, according to the API data. The SPR was tapped again during the reporting period, with 800,000 barrels released to commercial inventories, reducing the reserve to 283.8 million barrels. That level remains hundreds of millions of barrels below the SPR's maximum capacity and approaches the frequently cited operational lower bound of roughly 250–300 million barrels, below which the reserve could face difficulties in efficiently pumping and processing oil. On the products side, gasoline inventories increased by 2.991 million barrels in the week ending Sept. 25 following a 2.16 million barrel decline in the prior week; before this reporting period gasoline stocks had been about 6% below the five-year seasonal average, per EIA data referenced by the source. By contrast, distillate stocks fell for a second consecutive week, down 286,000 barrels on top of a 2.164 million-barrel decrease the week before, leaving distillates around 12% under the five-year average heading into the latest period. Market prices were lower midweek: Brent was trading near $102.32 per barrel (down about 2.8% on the day) while WTI traded near $88.96 (down about 3.9%), though Brent was up roughly $5 versus a week earlier and WTI was largely flat week-over-week. U.S. crude production for the week ending Sept. 18 was reported at 13.939 million barrels per day, a slight decline from the prior week's 13.944 million bpd but about 438,000 bpd above the same week a year earlier. Cushing hub inventory figures were not available at the time of the report.