A privately-conducted survey by the American Petroleum Institute (API) reports anticipated changes in oil inventory ahead of the official government data release. Expected changes include a decline of 2.6 million barrels in headline crude, 2.2 million barrels in distillates, and 3.3 million barrels in gasoline.
The official report from the US Energy Information Administration (EIA) is expected the following morning. While the API survey focuses on total crude oil storage levels, the EIA report includes more detailed data on refinery inputs, outputs, and various grades of crude oil, making it regarded as more accurate and comprehensive.
Impact On Market Sentiment
API’s findings suggest lower stockpiles across crude, distillates, and gasoline, which, if confirmed by government data, could impact market sentiment. A reduction of 2.6 million barrels in crude reserves aligns with expectations of rising demand or restricted supply. Declines in distillates and gasoline by 2.2 million and 3.3 million barrels, respectively, indicate consumption patterns that might influence pricing dynamics.
The market often reacts swiftly to API figures, but the EIA’s report carries more weight due to its deeper insights. The government’s numbers provide additional context on refinery utilisation, production shifts, and regional stock levels, making them more widely relied upon. Discrepancies between the two can cause adjustments in trader positioning, particularly when expectations are misaligned.
Given these projections, we recognise the need for a close examination of refinery operations and fuel demand. The summer driving season in the US often contributes to increased gasoline consumption, and with inventories declining, pricing could reflect tightening supply. If this trend is reinforced by EIA data, there may be further movement in related contracts.
Broader Economic Implications
Distillates, which include diesel and jet fuel, often serve as broader economic indicators. A decline here could suggest stronger industrial activity or heating fuel consumption depending on regional demand patterns. Any shift in refinery output, particularly swings in utilisation rates, would provide further clarity on how supply is being managed relative to shifting demand.
With attention turning to official figures, a deeper divergence from API estimates would require reassessing current exposures. Unexpected builds or sharper-than-forecasted drawdowns could prompt rebalancing, affecting short-term execution strategies. Given the volatility surrounding inventory reports, a measured approach is advisable as fresh data becomes available.
