US Crude Oil Inventories See Massive Drop Off

The American Petroleum Institute reported a significant decline of 11.12 million barrels in crude oil inventories across the United States for the week ending October 9. This marked a sharp drop from the previous week's decrease of 2.09 million barrels. Commercial crude oil reserves, excluding the Strategic Petroleum Reserve (SPR), have shrunk by over 51 million barrels in the past 26 weeks.

However, the overall crude oil inventory in the US remains relatively stable, similar to the beginning of the year. This stability is largely attributed to the withdrawals from the SPR. For the specific week ending October 9, no barrels were released from the SPR to bolster commercial inventories. The SPR's current reserve of 283 million barrels falls short of its operational minimum of 250-300 million barrels, which could potentially impede efficient oil pumping and processing.

US production for the week ending October 2 increased to 13.979 million barrels per day (bpd), up from 13.955 million bpd the week before, and up 350,000 bpd compared to a year ago. At 439 pm ET on Wednesday, Brent crude was trading at $106.02 per barrel, up 0.12% for the day. Brent has seen a $5 increase per barrel since this time last week.

In contrast, WTI crude was trading at $95.75 per barrel, up $0.93 per barrel, or 0.98%, for the day, marking nearly a $6 increase since last week. Gasoline inventories saw an increase of 1.1 million barrels during the week ending October 7, following a previous week's decline of 1.37 million barrels. Gasoline inventories were 6% below the five-year average for this period, according to the latest Energy Information Administration (EIA) data.

Distillate inventories decreased by 1.5 million barrels, after a rise of 461,000 barrels in the previous week. These inventories are currently 12% below their five-year average heading into this reporting period, as per EIA data. Cushing inventory, which is stored at the delivery hub for the WTI Crude futures contract, grew by 1.823 million barrels, up from a 866,000 barrel increase in the prior week.