The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning showing that U.S. commercial crude inventories jumped by 5.7 million barrels last week, maintaining a total U.S. commercial crude inventory of 438.9 million barrels. The commercial crude inventory is about 1% above the five-year average for this time of year.
Tuesday evening, the American Petroleum Institute (API) reported that crude inventories increased by 592,000 barrels in the week ending October 25. For the same period, analysts expected crude inventories to rise by about 729,000 barrels. Gasoline and diesel inventories also rose according to API, by 1.6 million and 2.0 million barrels. The EIA reported that gasoline inventories dropped by 3 million barrels last week and distillate inventories dropped by 1 million barrels.
West Texas Intermediate crude traded at around $55 Wednesday morning, while May 2020 futures traded around $54.50. In May of this year, the difference between the spot price and the six-month forward price was about $3 a barrel higher. That market position, known as backwardation, is slowly giving way to the more usual position where future prices are higher than current spot prices (called contango).
Last week’s inventories mark the seventh increase in U.S. commercial inventories in the past seven weeks. The OPEC+ oil-producing nations reportedly are considering extending the current round of production cuts beyond their scheduled March 2020 expiration. The cuts may even be increased as the cartel and its partners continue to seek a rebalancing of market supply with demand. Russia so far has been non-committal about deeper cuts. OPEC+ is scheduled to meet in early December to discuss further action
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 fell by 356,000 barrels a day to 3.33 million barrels a day. U.S. crude exports have averaged 2.92 million barrels a day for the year to date, an increase of nearly 56% year over year.