Industry analysts have recently noted a steep decline in US commercial crude oil inventories with close attention and interest. Over the past three weeks crude oil inventories fell by a record 27 million bbls to within the fiver year range. Previously, inventories had been well above this range for all but one week since March 2012. Robust inventories were largely the result of high inventories in the Midwest which, despite recent declines, remains 22% above the five year average.
Reasons for decline
- An increase in US refinery runs.
- A decrease in crude oil imports.
- An increase in backwardation on the West Texas Intermediate (WTI) futures price curve that has encouraged reducing inventories rather than buying crude at current market prices.
Primarily, it appears that the inventory draw as caused by an increase in already high refinery demand for crude.
The supply side
When it comes to supply, lower crude oil imports have increased the draw on stocks to meet demand from increased refinery runs. From 28th June - July 12th, US crude oil imports averaged less than the previous monitored period in June.
Gasoline and diesel prices
The average US retail price of regular gasoline is up 19 cents from thing time last year. The largest increase came on the East Coast, where prices are up seven cents a gallon. The national average for diesel fuel increased four cents a gallon, which is 12 cents a gallon higher than this time last year.
Adapted from press release by Claira Lloyd
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