The Commodities Feed: US crude oil inventory increases sharply


The International Energy Agency (IEA) released its latest monthly oil market report yesterday and its longer-term forecasts. The agency revised higher its demand growth estimates by 0.2MMbbls/d for 2023 and now expects global crude oil demand to increase by 2.4MMbbls/d to 102.3MMbbls/d. The agency estimates demand growth to slow down to 0.9MMbbls/d in 2024 as the switch to cleaner energy accelerates and overall energy demand stabilises. On the supply side, the IEA revised higher global supply estimates by around 0.2MMbbls/d for 2023 with global oil supply estimated to increase by 1.4MMbbls/d to 101.3MMbbls/d for the year. Most of the production growth comes from non-OPEC countries led by the US and Latin America. Global oil supply growth is expected to slow down to 1MMbbls/d in 2024.

For the longer term, the IEA estimates global demand growth to slow down significantly to less than 0.5% per year by 2027/28 as electric vehicles replace the demand for gasoline and distillates. By 2027/28, the IEA estimates oil demand growth to come only from LPG, ethane, or naphtha products (where substitution is limited) while demand for gasoline and diesel could fall. The IEA expects global major oil producers to maintain plans to build further capacity which will help keep the market well supplied in the longer term.

The weekly report from the Energy Information Administration (EIA) shows that US commercial crude oil inventories in the US jumped by 7.9MMbbls over the week to 467.1MMbbls. The market was anticipating a drawdown of 1.11MMbbls whilst the API reported a build of around 1MMbbls for the week. When factoring in the Strategic Petroleum Reserve (SPR) releases, total US crude oil inventories increased by around 6MMbbls as the SPR stocks fell by 1.9MMbbls for the second straight week. Meanwhile, oil inventories at Cushing, Oklahoma rose by 1.6MMbbls to 42.1MMbbls, the highest level since 2021. EIA said that US crude oil production was unchanged at 12.4MMbbls/d last week. As for refined product inventories, gasoline inventories rose by 2.1MMbbls, against a forecast for a build of 1MMbbls. Meanwhile, distillate stockpiles rose by 2.1MMbbls last week, quite in line with expectations for a build of 2MMbbls.



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