U.S. Crude Inventories Drop amid Continued SPR Draws

The American Petroleum Institute reported that U.S. crude oil inventories decreased by 2.6 million barrels during the week ending August 28, marking a decline from a 4.2 million barrel increase the previous week. Since the beginning of the 20-week period, commercial crude oil reserves excluding the Strategic Petroleum Reserve (SPR) have diminished by over 48 million barrels, while U.S. crude inventories have grown by 3.1 million barrels for the year.

On August 28, an additional 3.1 million barrels were removed from the SPR to support commercial inventories, raising the current SPR inventory to 286.6 million barrels—short by 445 million barrels from maximum capacity. The SPR's operational minimum is typically between 250-300 million barrels, and falling below this range could hinder efficient oil pumping and processing.

U.S. production for the week ending August 21 reached 13.843 million barrels per day (bpd), up from 13.830 bpd the prior week and 461,000 bpd compared to the previous year. At 4:16 pm ET on Tuesday, Brent crude was up $5.90 to $95.28, a 5.9% increase, while West Texas Intermediate (WTI) rose $5.08 to $90.84, a 5.92% gain. Gasoline inventories expanded by 300,000 barrels during the week ending August 28, after falling by 3.2 million barrels the previous week.

Gasoline stocks were 6% below the five-year average for this time of year, according to the latest Energy Information Administration (EIA) data. Distillate inventories declined by 300,000 barrels, following a 500,000-barrel reduction the previous week, and were 14% below the five-year average at the start of this reporting period.

Cushing inventory, stored at the WTI Crude futures contract delivery hub, increased by 200,000 barrels over the period, following a 1 million barrel rise the week before.