US Oil Market: Inventories Decline as SPR Hits 40-Year Low
According to the latest report from the American Petroleum Institute (API), US crude oil inventories have decreased during the week ending July 3, continuing a declining trend that has persisted for over two months. This data reflects the complex fluctuations in the global energy market, with multiple factors affecting both supply and prices.
Crude Oil Inventories Continue to Decline
During the week ending July 3, US crude oil inventories decreased by 399,000 barrels. This figure is significantly lower than the decrease of 6.072 million barrels in the previous week. Although commercial crude oil inventories (excluding the Strategic Petroleum Reserve - SPR) have been rapidly declining for over two months, decreasing by nearly 60 million barrels over the past 12 weeks, total US crude oil inventories have only decreased by 8.6 million barrels this year.
The inventory decline has been tempered by withdrawals from the SPR. Below is a summary table of crude oil inventory conditions:
| Indicator | Week Ending July 3 | Previous Week | Change |
|---|---|---|---|
| Crude oil inventories (million barrels) | -0.399 | -6.072 | -5.673 |
| Total crude oil inventories this year (million barrels) | -8.6 | -8.6 | 0 |
Strategic Petroleum Reserve Reaches 40-Year Low
During the week ending July 3, an additional 6.2 million barrels of oil were withdrawn from the SPR, bringing total SPR reserves down to 325.7 million barrels. This level is lower than the 2023 low recorded during a major Biden administration withdrawal and represents the lowest level in over 40 years.
Current SPR situation:
- SPR inventories: 325.7 million barrels
- Weekly decrease: 6.2 million barrels
- Gap from maximum capacity: 405 million barrels
Summary of SPR Conditions
| Time Period | SPR Inventories (million barrels) | Weekly Change | Level vs. Maximum Capacity |
|---|---|---|---|
| Current | 325.7 | -6.2 | -405 |
| 2023 Low | Over 325.7 | - | - |
| Maximum Capacity | 730.7 | - | 0 |
US Oil Production Slightly Declines
According to the latest data from the US Energy Information Administration (EIA), US oil production decreased to 13.810 million barrels per day during the week ending June 26, from 13.819 million barrels per day in the previous week. However, compared to the same period last year, production has increased by 377,000 barrels per day.
Oil Prices Rise Following Attacks in Strait of Hormuz
At 3:34 PM ET on Tuesday, Brent crude increased 5.67% for the day, trading at $76.07 per barrel, following a series of attacks on oil tankers in the Strait of Hormuz. WTI crude also rose 5.37% for the day to $72.23 per barrel, an increase of approximately $2 per barrel from the previous week.
Oil Price Comparison
| Oil Type | Price (USD/barrel) | Daily Change | Change from Previous Week |
|---|---|---|---|
| Brent | 76.07 | +5.67% | - |
| WTI | 72.23 | +5.37% | +~2.00 |
Gasoline Inventories Continue to Decline
Gasoline inventories decreased by 2.929 million barrels during the week ending July 3, after decreasing by 2.106 million barrels in the previous week. According to the latest EIA data, gasoline inventories in the previous week were 7% lower than the five-year average for the same period.
Distillate inventories (diesel and heating oil) decreased by 1.801 million barrels, after increasing by 2.9 million barrels in the previous week. As of the week ending June 26, distillate inventories were 8% below the five-year average.
Gasoline and Distillate Inventory Status
| Product Type | Weekly Change (million barrels) | vs. Five-Year Average |
|---|---|---|
| Gasoline | -2.929 | -7% |
| Distillate | -1.801 | -8% |
Cushing Inventories - WTI Trading Hub
Inventories at Cushing - the WTI futures trading hub - decreased by 69,000 barrels during the reporting period, after increasing by 503,000 barrels in the previous week. The fluctuations at Cushing reflect demand and supply conditions at the most important US oil trading center.
Conclusion
The US oil market is witnessing a prolonged decline in inventories, supported by significant withdrawals from the SPR. While oil production has slightly decreased, it remains higher than last year's levels. Oil prices have risen sharply following security incidents in the Strait of Hormuz, while gasoline and distillate inventories continue to decline below five-year averages. This situation indicates pressure on supply and could continue to push energy prices higher in the coming period.