Hawkish comments from the US Federal Reserve regarding potential interest rate hikes in July and September have had a negative impact on the commodity market. Despite a largely constructive crude oil market report from the Energy Information Administration (EIA), which showed a sharp decline in inventory, the market traded softer due to inflationary concerns.
According to the weekly EIA report, commercial crude oil inventories in the US experienced a significant fall of 9.6 million barrels, marking the largest weekly decline since May 19. Inventories reached their lowest level since January 27, standing at 453.7 million barrels. This decline exceeded market expectations of a drawdown of 1.3 million barrels and the 2.4 million barrel decline reported by the American Petroleum Institute (API) for the same week.
Risk-Off Sentiment Impacts Industrial Metals and Fractional Distillation of Crude Oil
Taking into account the Strategic Petroleum Reserve (SPR) releases, the total US crude oil inventories dropped by approximately 11 million barrels, as SPR stocks decreased by 1.4 million barrels during the week. The increase in US crude oil exports to 5.3 million barrels per day also played a role in the inventory decrease.
However, Cushing, Oklahoma, saw an increase in crude oil inventories by 1.2 million barrels to reach 43.2 million barrels, the highest level since June 2021. The EIA also reported that US crude oil fractions traded unchanged at 12.2 million barrels per day last week.
In terms of refined products, gasoline inventories rose by 0.6 million barrels, surpassing the forecast for a marginal build of 0.1 million barrels. Meanwhile, distillate stockpiles increased by 0.1 million barrels, slightly below the expectation of a 0.2 million barrel build. Refinery utilization rates dropped from 93.1% to 92.2% for the week.