The decline in crude oil stockpiles does not meet expectations

U.S. crude oil inventories fell by 1.5 million barrels in the week ended Sept. 27, according to The American Petroleum Institute (API). Analysts had expected a drop of 2.1 million barrels.

For the previous week, the API reported a 4.339 million barrel drop in crude oil inventories.

So far this year, crude oil inventories are nearly 17 million barrels below where they were at the start of the year, according to API data.

On Tuesday, the Department of Energy (DoE) reported that crude oil stocks in the Strategic Petroleum Reserve (SPR) increased by 0.7 million barrels since September 27. Inventories are now at 382.6 million barrels. The SPR is now up more than 35 million from last summer’s multi-decade low, though it’s still down 252 million from when President Biden took office. At the current rate of replenishment, it will take more than five years to return to January 2020 levels.

Oil prices rose sharply on Tuesday ahead of the release of API data after Iran fired more than 100 ballistic missiles into central Israel, with the world fearing retaliation from the latter. At one point, oil prices were trading up more than 5% on the day.

As of 3:17 PM ET, Brent crude was trading up $2.08 (+2.90%) on the day at $73.78, but still down about $1.40 from this time last week. US benchmark WTI also traded up $1.95 (+2.86%) on the day at $70.12 — $1.50 a barrel below where it stood this time last Tuesday.

Gasoline inventories rose this week by 900,000 barrels, compared with a 3.438 million barrel drop last week. As of last week, gasoline inventories are 1 percent below the five-year average for this time of year, according to the latest EIA data.

Distillate stockpiles fell 2.7 million barrels, on top of last week’s drop of 1.115 million barrels. Distillates were already about 9 percent below their five-year average in the week ended Sept. 20, the latest EIA data showed.

Cushing inventories rose for the week by 700,000 barrels, according to API data, compared with a draw of 26,000 barrels the previous week.

By Julianne Geiger for Oilprice.com

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