Weekly US energy inventory data for the week ending March 7 showed an increase in crude oil by 1,448,000 barrels, compared to the expected 2,001,000. The prior week’s figure was a decrease of 2,332,000.
Gasoline inventories fell by 5,737,000 barrels, against an expectation of a decrease of 1,882,000. Distillates also showed a drop of 1,559,000 barrels, with expectations of a decrease of 757,000.
Refinery Utilisation And Private Data
Refinery utilisation decreased by 0.6%, differing from the forecast of an increase of 0.4. Private oil data indicated a crude increase of 4,247,000 barrels, while gasoline saw a decline of 4,560,000 and distillates rose by 421,000.
WTI crude oil traded higher at $67.30 prior to the report. A former CEO of Pioneer remarked that the US might face challenges with depleting Tier 1 and Tier 2 inventory levels in the coming years.
These inventory figures illustrate a mixed picture for crude and refined products. A rise in crude stocks, though smaller than anticipated, combined with sharp declines in gasoline and distillates, points to a market balancing supply with resilient demand. The prior week’s crude draw made this inventory build appear less bearish than it might have been in isolation. Meanwhile, the outsized drop in petrol and distillate inventories suggests consumption remains healthy at these levels.
The dip in refinery utilisation, contrary to estimates, indicates refiners are not ramping up as expected. With crude stocks increasing but refined products tightening, this signals some constraints in processing capacity. The divergence between official inventory data and private-sector figures adds another point of consideration. The latter showed a larger crude build but a considerable gasoline draw, raising questions about potential adjustments in next week’s report.
Market Reaction And Future Outlook
Oil traded higher leading into the release, reflecting sentiment before the numbers became public. The price reaction in the hours following will offer further insight into how traders interpret the balance between inventory movements and broader market trends.
Concerns over future supply remain in focus, particularly with comments from Sheffield about the potential depletion of high-quality drilling locations in the US. If production struggles to maintain current levels in the coming years due to inventory constraints, this factor could weigh on long-term price expectations.
