In an unexpected turn of events, U.S. crude oil and gasoline inventories experienced a notable increase last week, defying predictions and sending shockwaves through the energy market. Data released by the Energy Information Administration (EIA) on Wednesday revealed that commercial crude-oil stockpiles, excluding the Strategic Petroleum Reserve, surged by 8.7 million barrels to reach 448.1 million barrels in the week ended Nov. 17. This marked a 1% deviation below the five-year average for this time of year, catching analysts off guard, who had anticipated a modest 100,000-barrel rise.
Adding to the surprise, oil stored at Cushing, Oklahoma, the Nymex delivery hub, rose by 900,000 barrels to a total of 25.9 million barrels. Despite this increase, U.S. crude oil production remained stable at 13.2 million barrels a day, according to the EIA. The Nymex front-month crude contract for January took a hit in response to a series of bearish developments, including the Organization of Petroleum Exporting Countries’ (OPEC) decision to postpone its weekend meeting to the end of the month. As a result, the WTI for January delivery experienced a 4% drop, settling at $74.69 a barrel.
Gasoline stockpiles also witnessed an unexpected rise, increasing by 700,000 barrels to reach 216.4 million barrels as of Nov. 17. This exceeded analysts’ predictions of a 600,000-barrel draw on gasoline stocks. Distillate stocks, predominantly diesel fuel, bucked expectations as well, decreasing by 1 million barrels to 105.6 million barrels against an anticipated 600,000-barrel draw, as reported by The Wall Street Journal survey. Despite this drawdown, distillate stocks were revealed to be 13% below their five-year average, according to the EIA.
The refining sector added another layer to the unexpected developments, with the refining capacity utilization rate rising to 87%, up 0.9 percentage points from the previous week. This exceeded expectations, which had predicted a 0.8 percentage-point increase. The surge in refining activity is a noteworthy aspect of the latest data, indicating increased demand for refined products despite the uncertainties surrounding the energy market.
The market’s reaction to these surprising figures was palpable, as the Nymex front-month crude contract for January faced downward pressure. Investors and industry stakeholders are closely monitoring the situation as they navigate through a landscape marked by geopolitical considerations, OPEC decisions, and shifting demand dynamics.
The unexpected surge in U.S. crude oil and gasoline inventories, coupled with the rise in refining capacity utilization, has injected a new level of uncertainty into the energy market. Analysts and industry experts are reassessing their forecasts in light of these surprising developments, highlighting the need for vigilance in a sector known for its susceptibility to various geopolitical and economic factors. As the market digests this information, stakeholders will be closely watching for further insights into the underlying factors driving these unexpected trends.
(Source: WSJ | Bloomberg)
