The latest official data from the U.S. Energy Information Administration (EIA) showed a marked divergence in U.S. energy sector indicators, with crude oil inventories declining during the week ending December 5, while refined fuel inventories, specifically gasoline and distillates, saw a significant increase that exceeded analysts' and markets' expectations.
Details of crude oil inventory movements
According to the Energy Information Administration's weekly report, U.S. commercial crude oil inventories fell by 1.8 million barrels, settling at 425.7 million barrels. While this decline is a positive indicator for crude demand, it was less than the expected drop of approximately 2.3 million barrels. Meanwhile, inventories at the Cushing, Oklahoma, delivery hub for U.S. crude futures contracts rose by 308,000 barrels, adding slight downward pressure to the price structure at this key center.
A surge in fuel and refinery inventories
On the other hand, the data revealed a sharp increase in refined product inventories, which could raise concerns about end-user demand. Gasoline inventories rose by 6.4 million barrels to 220.8 million barrels, a much larger increase than analysts' expectations of a 2.8 million barrel rise. Distillate inventories, which include heating oil and diesel, also rose by 2.5 million barrels to 116.8 million barrels, exceeding expectations of a 1.9 million barrel increase.
Refinery activity and import movement
Regarding refining activity, the administration explained that refinery crude oil consumption decreased slightly by 16,000 barrels per day, but refinery utilization rates increased to 94.5% of their operating capacity. This increase in utilization rates explains the significant rise in inventories of refined products (gasoline and diesel), as refineries are operating at high capacity to convert crude into derivatives. As for foreign trade, net U.S. crude oil imports increased by 212,000 barrels per day, averaging 2.6 million barrels per day.
Economic context and the importance of data
This data is of paramount importance in global energy markets, as the United States is the world's largest producer and consumer of oil. Investors closely monitor these weekly reports to gauge supply and demand trends. Historically, declining crude oil inventories are seen as supportive of prices, but a significant increase in gasoline and distillate stockpiles can send bearish signals to the markets, indicating that fuel supply exceeds current demand or that domestic consumption is slowing, which could limit short-term gains in crude oil prices.
