How U.S. Crude Oil Inventories Are Affecting the Oil Market
The U.S. Energy Information Administration (EIA) publishes a weekly report on the status of crude oil and petroleum products in the country. The report, known as the Weekly Petroleum Status Report (WPSR), provides data on the supply and demand of oil and its derivatives, as well as the prices and movements of these commodities.
WPSR Unveils Significant Crude Inventory Drawdown, Propelling Oil Prices Amid Market Tightening
The WPSR is one of the most closely watched indicators of the oil market, as it reflects the balance between production, consumption, imports, exports, and storage of crude oil and petroleum products in the U.S., which is the world's largest oil consumer and producer.
One of the key data points in the WPSR is the change in crude oil inventories, which measures the weekly difference in the number of barrels of commercial crude oil held by U.S. firms. The level of inventories influences the price of oil, as it indicates the availability and demand of crude oil in the market.
If the increase in crude inventories is more than expected, it implies weaker demand and/or higher supply, which is bearish for oil prices. The same can be said if a decline in inventories is less than expected. Conversely, if the increase in crude inventories is less than expected, it implies stronger demand and/or lower supply, which is bullish for oil prices. The same can be said if a decline in inventories is more than expected.
According to the latest WPSR released on Jan. 24, 2024, U.S. crude oil inventories decreased by 9.2 million barrels from the previous week, much more than the market expectation of a 2.2 million barrel drop. This was the third consecutive week of inventory drawdowns, as domestic production was affected by winter storms and extreme cold temperatures, while refinery inputs and exports increased.
At 420.7 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year. Total motor gasoline inventories increased by 4.9 million barrels from last week and are about 1% above the five-year average for this time of year.
Analyzing the Jan. 24 WPSR: U.S. Crude Inventories Plummet, Fueling Bullish Trends in Oil Markets
The sharp decline in crude inventories boosted oil prices, as it signaled a tightening of the market amid strong demand and supply disruptions. The West Texas Intermediate (WTI) crude futures, the U.S. benchmark for oil prices, settled at $83.76 per barrel on Jan. 24, up 2.4% from the previous day. The Brent crude futures, the international benchmark for oil prices, settled at $86.32 per barrel on Jan. 24, up 1.9% from the previous day.
The WPSR also provides information on other factors that affect the oil market, such as imports and exports of crude oil and petroleum products, refinery operations and utilization rates, production levels and estimates, spot and futures prices, and retail prices of gasoline and diesel.
The WPSR is released every Wednesday at 10:30 a.m. Eastern Time (ET), except on federal holidays, when it is released on Thursday at 11:00 a.m. ET. The report covers data for the week ending on Friday of the previous week.
The WPSR is a valuable source of information for analysts, traders, investors, policymakers, and consumers who want to understand the dynamics of the oil market and its implications for the economy and the environment.
Sources:
: [Weekly Petroleum Status Report - U.S. Energy Information Administration (EIA)](https://www.eia.gov/petroleum/supply/weekly/)
: [United States Crude Oil Inventories - Investing.com](https://www.investing.com/economic-calendar/eia-crude-oil-inventories-75/)
: [Weekly Petroleum Status Report - U.S. Energy Information Administration ...](https://www.eia.gov/petroleum/supply/weekly/pdf/highlights.pdf)