US crude oil inventories plunge despite import surge; rising product stocks hint at weak demand

Crude oil inventories in the US plunged more than expected, surprising analysts even as imports surged in the week ended November 29, the US Energy Information Administration (EIA) report showed. 

Last week, inventories in the US fell by 5.1 million barrels to 423.4 million barrels, the EIA said in its weekly report late on Wednesday. 

Analysts had expected oil stockpiles to fall by just 1.6 million barrels last week. 

Inventories were about 5% below the five-year average for the time of the year, EIA said.. 

Refineries in the US operated at 93.3% of their operable capacity last week, compared with 90.5% in the preceding week, the agency said. 

Though the fall in inventories was bullish for oil prices, a significant rise in product stocks offset the positive sentiments in the market. 

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was largely unchanged at $68.53 per barrel. Brent crude on the Intercontinental Exchange was at $72.31 per barrel, flat from the previous close. 

Product stocks surge

EIA said gasoline inventories in the US rose by 2.4 million barrels to 214.6 million barrels for the week ended November 29. 

Gasoline stocks were about 4% below the five-year average last week, the agency said. 

Meanwhile, distillate stockpiles also surged by 3.4 million barrels to 118.1 million barrels last week, the data showed. Stocks were about 5% below the five-year average. 

Stocks of fuel ethanol increased 100,000 barrels to 23.0 million barrels, while those of residual fuel fell by 200,000 barrels to 23.0 million barrels. 

Meanwhile, stocks of propane and propylene declined by 700,000 barrels to 96.0 million barrels last week.

The build-up of gasoline and distillate stocks points to poor domestic demand for fuel in the US. 

Oil production rises

Production of oil in the world’s largest producer increased last week by just 20,000 barrels per day to 13.513 million barrels per day.

Oil production remained near record levels in the US last week.

Production in Alaska rose just 2,000 barrels per day to 446,000 barrels per day. 

Oil output increased by 18,000 barrels per day in the Lower 48 US states to 13.067 million barrels per day, the EIA said. 

EIA had earlier projected that average annual production is expected to be at record levels this year at 13.23 million barrels per day.

This was about 300,000 barrels per day higher than 2023’s average level. 

Reports have claimed that US President-elect Donald Trump is likely to approve a plan in his first few days back at the White House to increase drilling for oil and gas on federally owned lands and off the coasts of the country.

Analysts at Commerzbank AG have said Trump’s policies are likely to increase crude oil production in the US in the medium to longer term. 

Oil imports soar, exports dip

Crude oil imports by the US rose by as much as 1.21 million barrels per day to 7.290 million barrels per day last week. Imports rose sharply after a steep drop in the preceding week ending November 22. 

The four-week average for imports last week was up 5% on a year-on-year basis to 6.891 million barrels per day. 

Exports fell by 428,000 barrels per day to 4.235 million barrels per day last week, EIA said. 

The four-week average for exports was down 10.9% on a year-on-year basis to 4.179 million barrels per day. 

Oil imports from Venezuela fell by 95,000 barrels per day last week to just 173,000 barrels per day. Imports from Canada also fell slightly by 37,000 barrels per day to 4.044 million barrels a day.

Trump recently said that he intends to impose a 25% tariff on Mexican and Canadian imports to the US, which is likely to include oil as well. 

Imports from most other countries rose last week.