The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories declined by 1.7 million barrels last week, maintaining a total U.S. commercial crude inventory of 433.2 million barrels. The commercial crude inventory is about 2% above the five-year average for this time of year.
Tuesday evening the American Petroleum Institute (API) reported that crude inventories increased by 4.45 barrels in the week ending October 18. For the same period, analysts expected crude inventories to rise by about 2.23 million barrels. Gasoline and diesel fuel inventories both fell, by 2.27 million and 3.49 million barrels, respectively, according to the API. The EIA reported that gasoline inventories dropped by 31 million barrels last week, and distillate inventories dropped by 2.7 million barrels.
West Texas Intermediate traded at around $55.00 Wednesday morning, while May 2020 futures traded around $54.00. In May of this year, the difference between the spot price and the six-month forward price was about $3.00 a barrel. That market position, known as backwardation, is slowly giving way to the more usual position in which future prices are higher than current spot prices (called contango).
Even though U.S. inventories of crude and refined products fell for the first time in six weeks, the price increase has been relatively modest because the supply imbalance continues. Adding to the pressure on crude prices is a statement from the Russian energy minister that none of the so-called OPEC+ producing countries has proposed cutting production even more.
Continued softening of global economic growth forecasts also tamps down oil prices because it indicates a dampening of demand for energy.
U.S. production last week totaled 12.6 million barrels a day and net crude exports rose by 435,000 barrels a day to 3.68 million barrels a day. U.S. crude exports have averaged 2.91 million barrels a day for the year to date, an increase of nearly 57% year over year.