- Commercial US crude inventories, excluding the Strategic Petroleum Reserve, fell by 1.9 million barrels to 410.6 million barrels in the week ended Oct. 23, the Energy Information Administration said Wednesday. It was the fourth straight weekly decline, and stocks are now 4% below the five-year average for the time of year.
- The draw was far larger than expected. Analysts surveyed by the Wall Street Journal had forecast a dip of just 100,000 barrels, and stocks at Cushing, Oklahoma, the Nymex delivery hub, fell by 624,000 barrels to 27 million barrels.
- Exports did much of the work. Crude exports rose by 1.4 million barrels a day to 4.9 million barrels a day, outpacing a 616,000-barrel-a-day rise in imports to 6.4 million, while US production recovered from storm-related shut-ins, climbing 723,000 barrels a day to 14 million barrels a day.
- Refined products sent mixed signals. Gasoline inventories rose by 3.9 million barrels to 209.2 million as demand fell by 625,000 barrels a day, while distillate stocks fell by 1.5 million barrels to 102.8 million and sit 10% below the five-year average.
What Happened?
The EIA’s weekly report showed crude inventories falling for a fourth week while gasoline stocks built and distillates drew down. Refineries ran at 92.8% of capacity, down from 93.4% the prior week, with crude inputs falling by 123,000 barrels a day to 16.5 million barrels a day. Gasoline stocks had been expected to fall by 700,000 barrels and distillates by 1.1 million barrels. Oil stored in the SPR slipped by 100,000 barrels to 282.6 million barrels.
Why It Matters?
The data adds a domestic supply squeeze to a market already driven by the Iran war. Brent crude rose 1.7% to $115.86 a barrel and WTI gained 2.7% to $102.57 on Wednesday after reports that the US told Gulf states to prepare for a short but intense military campaign after the midterm elections, according to CNBC. Strong export demand for US barrels is draining domestic inventories, while distillate stocks 10% below normal heading into winter keep diesel and heating oil exposed to price spikes.
What’s Next?
Traders will watch whether exports stay elevated next week and whether the gasoline build continues as demand softens at higher prices. Diesel tightness matters for inflation-sensitive sectors such as trucking and airlines, and for the Fed, which is weighing energy-driven inflation at today’s meeting. Any escalation in the Gulf would hit a US market with less inventory cushion than usual.
