US crude stocks rise by 5.8 million barrels, but falling product inventories support prices

Crude oil prices rose on Thursday despite a hefty build in the US oil inventories for the week ending 4th October.

The bearish US Energy Information Administration report, which came out late on Wednesday was offset by the shutdown of oil facilities in Florida due to Hurricane Milton, and geopolitical tensions.

Traders also focused on the falling stocks of petrol and diesel. 

Crude oil inventories in the US rose by 5.8 million barrels last week to 422.7 million barrels, and stocks are now only 4% below the five-year average, EIA data showed. 

Analysts had expected crude oil stockpiles to rise by just 2 million barrels in the week ended Friday. 

Private firm, American Petroleum Institute, earlier this week reported that oil stockpiles in the US surged by as much as 10.9 million barrels last week. 

However, on greater analysis of the report, the data suggests a different picture about the domestic fuel demand in the US. 

Oil inventories rise, but fuel stocks slump

Even as crude oil inventories surged last week, putting pressure on global prices, the petroleum and diesel stocks slumped. 

Falling stockpiles of crude oil petroleum products in the US indicate that local fuel demand remains robust.

Petrol stocks in the US slumped by 6.3 million barrels last week to 214.9 million barrels last week.

Similarly, distillate fuel oil or diesel stocks fell 3.1 million barrels in the week ended Friday to stand at 118.5 million barrels.

Additionally, product stockpiles are expected to decline this week as well.

Next week’s weekly report is likely to confirm that as Hurricane Milton, which hit Florida on Wednesday, led to the shutdown of several oil refineries in the Gulf of Mexico region.

Imports and exports fall

Last week, the US imported around 6.24 million barrels per day of crude oil, which was down by 389,000 barrels a day from the previous week. 

Similarly, exports fell slightly by 84,000 barrels per day to 3.79 million barrels a day last week, according to EIA’s data. 

The last four-week average for crude oil imports stood at 6.41 million barrels per day, down 2.5% from the corresponding period last year. 

For exports, the four-week average was 4.04 million barrels per day, down as much as 5.5% from the same period a year earlier, the data showed. 

Oil imports from Canada fell 300,000 barrels per day last week to 3.50 million barrels per day, while those from Colombia were down 198,000 barrels per day at just 149,000 barrels a day. 

Imports from Saudi Arabia rose the most by 141,000 barrels per day to 285,000 barrels a day during the week ended Friday, the data showed. 

Saudi Arabia last week had cut the official selling price of  all crude oil grades to Europe and the US for November landings. Imports are likely to rise from the Kingdom next month. 

Meanwhile, crude oil production in the US last week averaged 13.4 million barrels per day, 100,000 barrels a day higher than the previous week. 

Oil prices ignore hefty build of inventories

Oil prices rose on Thursday buoyed by geopolitical tensions and as Hurricane Milton forced refineries in the Gulf of Mexico to shut down. 

Additionally, traders also focused on the declining stockpiles of diesel and petrol in the US. 

At the time of writing, the price of West Texas Intermediate crude, the benchmark for the US, was $74.18 per barrel, up 1.3% from the previous close.

Brent crude was at $77.56 per barrel, up 1.3%.

As several refineries are likely to be out of operation due to Hurricane Milton, product stocks may fall this week as well.

Facilities are expected to refine less crude oil next week, which may push up the overall oil inventories as well.

In such a scenario, oil prices may rise further, taking cues from falling product stocks in the US. 

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