Why U.S. Crude Oil Imports Are Rising
In early March, a bearish inventory report from the Energy Information Administration’s (EIA) Weekly Petroleum Status Report (WPSR) caused a sell-off in oil prices. The price of West Texas Intermediate (WTI) dropped below $50 a barrel (bbl) for the first time since December and proceeded to remain below $50/bbl for the next three weeks.
At the time I noted that the inventory report wasn’t as bearish as it seemed. Although the EIA reported an 8.2 million barrel crude oil build, there were mitigating factors. One is that this is refinery maintenance season, the time of year that crude oil tends to pile up as refinery utilization falls.
Lower refinery utilization also results in product inventories being drawn down, and that happened as well during that week. More than offsetting the 8.2 million barrel crude oil build was a gasoline inventory draw of 6.6 million barrels and a distillate fuel inventory draw of 2.7 million barrels. When all finished products were included in the mix, total commercial inventories actually decreased by 2.4 million barrels that week.
Written by Robert Rapier