Key Points:

• U.S. crude oil inventories rose by 0.5M barrels, contrary to expectations of a drawdown, keeping stocks 4% below the five-year average.
• Gasoline inventories increased by 2.1M barrels, yet remain 4% below the five-year average, hinting at seasonal supply concerns.
• Refinery inputs fell 281K bpd, with refineries operating at 90.2% capacity. Gasoline and distillate production also declined.
• Crude imports surged to 7.7M bpd, up 1.2M bpd from last week, marking a four-week average 2.7% higher than last year.
• Weak distillate demand, down 6.4% year-over-year, signals ongoing challenges for middle distillate markets despite steady production.

U.S. Crude Oil Inventories Edge Higher Despite Refinery Slowdown

U.S. crude oil inventories rose modestly in the week ending November 15, 2024, as refinery activity slowed and imports climbed. According to the latest data, commercial crude oil inventories increased by 0.5 million barrels to 430.3 million barrels, maintaining a level 4% below the five-year average. This came despite pre-report expectations of a 100,000-barrel decline, underscoring mixed signals for crude oil prices.

Refinery Utilization Falls as Crude Inputs Decline

Crude oil refinery inputs averaged 16.2 million barrels per day (bpd), a decrease of 281,000 bpd from the previous week. Refineries operated at 90.2% of their capacity, reflecting a slowdown in processing activity. Gasoline production dropped to 9.3 million bpd, while distillate fuel production fell to 4.8 million bpd, marking declines in key petroleum product outputs.

Crude Oil Imports Surge While Product Imports Remain Mixed

Crude oil imports surged by 1.2 million bpd to 7.7 million bpd, significantly above the four-week average of 6.6 million bpd. This represents a 2.7% increase compared to the same four-week period last year. In contrast, motor gasoline imports remained relatively low at 374,000 bpd, while distillate fuel imports averaged 123,000 bpd.

Product Inventories Show Mixed Trends

Total motor gasoline inventories rose by 2.1 million barrels but remained 4% below the five-year average. Both finished gasoline and blending components saw gains, suggesting a rebound in gasoline supply. Distillate fuel inventories edged down by 0.1 million barrels and also stood 4% below the five-year average. Meanwhile, propane/propylene inventories dropped by 0.7 million barrels but stayed 10% above their five-year average, signaling robust supply in this category.

Demand Trends Provide Limited Support

Total products supplied averaged 20.7 million bpd over the past four weeks, a modest 1.2% increase year-over-year. Motor gasoline demand rose slightly, averaging 8.9 million bpd, up 0.5% from the same period last year. However, distillate fuel demand contracted sharply, falling 6.4% year-over-year, while jet fuel demand dipped 1.3%, indicating softer conditions in middle distillate markets.

Market Forecast: Bearish Outlook for Crude Prices

The combination of rising crude imports, higher inventories, and softer demand for distillates and jet fuel suggests limited upside for crude oil prices in the near term. While refiners may increase runs in the coming weeks, the current supply-demand balance points to a bearish outlook for crude oil, particularly if demand fails to rebound significantly in key product categories.