The U.S. Energy Information Administration (EIA) released its weekly inventory report on Wednesday, revealing that last week's U.S. crude oil inventory decline unexpectedly surpassed projections. The primary delivery point in Cushing saw a significant reduction in crude oil inventory, reaching its lowest level since July 2022, a point of keen market interest. This news propelled oil prices, with U.S. crude surging by 3% to break the $93 per barrel mark and Brent crude increasing by 2% to surpass $94 per barrel.
Here are the specific inventory figures for the week of September 22, according to the EIA:
- Crude oil inventory decreased by 2.169 million barrels, exceeding the anticipated decline of 900,000 barrels predicted by analysts and the 525,000 barrel drop forecasted by Bloomberg users. The previous week saw a decrease of 2.136 million barrels.
- In Cushing, the main delivery point for WTI crude futures, crude oil inventory decreased by 943,000 barrels, following a reduction of 2.064 million barrels the previous week. Over the past 13 weeks, Cushing's crude inventory has declined 12 times. The current inventory stands slightly below 22 million barrels, nearing operational minimum levels.
- After increasing its inventory over the previous seven weeks, the Strategic Petroleum Reserve (SPR) reduced its stock by 250,000 barrels last week.
- Gasoline inventory rose by 1.027 million barrels, contrary to the expected 500,000 barrel decline. The previous figure was a decrease of 831,000 barrels.
- Distillate fuel inventory increased by 398,000 barrels, against an anticipated decline of 1 million barrels.
The EIA report also highlighted that U.S. crude oil production remains near pre-pandemic highs, even as the number of drilling rigs continues to drop. Additionally, U.S. oil imports from Mexico surged 40% to 844,000 barrels per day during the week of September 22.
There was a noticeable discrepancy between the EIA's inventory report and the one released by the American Petroleum Institute (API) on Tuesday. The API data indicated an increase of 1.586 million barrels in U.S. crude oil inventory for the week of September 22, against an expected decline of 1.65 million barrels. In Cushing, crude inventory decreased by 828,000 barrels.
The focus of this report was on Cushing's crude oil inventory situation. In Cushing, the utilization rate of storage tanks stands at 25%.
Financial blog Zerohedge commented that Cushing's crude oil inventory is nearing its bottom. For operational reasons, Cushing always needs to maintain some oil reserves, similar to the U.S. SPR. Industry insiders have previously mentioned that when Cushing's inventory drops to the 20-25 million barrel range, traders will start discussing the inventory floor. Some market veterans are concerned that the de-stocking has been excessive, and Cushing's crude oil inventory is now being drained.
Following the release of the EIA's latest report, WTI crude's intraday gains reached 3%, trading at $93.14 per barrel. Brent crude increased by 2%, trading at $94.3 per barrel.
Recently, discussions about oil prices potentially reaching $100, or even surging to $150 in the future, have been prevalent. On Monday, executives from several U.S. energy giants weighed in. Many companies are choosing not to increase production as oil prices near $100, citing inconsistent U.S. energy policies that hinder oil production. Some industry leaders echoed JPMorgan's recent prediction of a $150 oil supercycle, suggesting that if the U.S. government remains inactive, oil prices could reach that level.
