U.S. oil inventories shift as crude and distillate stocks fall

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U.S. oil inventories shift

Highlights

U.S. crude inventories drop by 1.9 million barrels to 410.6 million barrels for the week ended October 23, defying forecasts for a small build.
Distillate inventories fall by 1.5 million barrels to 102.8 million barrels, while gasoline stocks surge by 3.9 million barrels to 209.2 million barrels.
Brent crude futures trade at $115.66 and WTI at $102.38 as tighter inventories and strong exports support prices, but export data faces scrutiny from Kpler.

Weekly inventory data and demand trends

As reported by Reuters, citing the Energy Information Administration, U.S. crude inventories fall by 1.9 million barrels to 410.6 million barrels in the week ended October 23, against analysts' expectations in a Reuters poll for a 15,000-barrel increase.

Crude stocks at the Cushing, Oklahoma, delivery hub fall by 624,000 barrels, while Gulf Coast inventories drop to their lowest level since December 2024. Net U.S. crude imports fall by 796,000 barrels per day and exports rise by 1.4 million barrels per day to 4.85 million barrels per day.

Total product supplied, a measure of demand, falls by 1.022 million barrels per day to 20.21 million barrels per day. Distillate fuel demand rises by 475,000 barrels per day to 4.21 million barrels per day, while gasoline demand falls by 622,000 barrels per day to 8.358 million barrels per day.

U.S. gasoline stocks rise by 3.9 million barrels to 209.2 million barrels, compared with expectations for a 0.9 million-barrel draw. Distillate inventories, which include diesel and heating oil, fall by 1.5 million barrels to 102.8 million barrels, broadly in line with expectations for a 0.9 million-barrel decline.

Refinery crude runs fall by 123,000 barrels per day during the week, and refinery utilization slips by 0.6 percentage points to 92.8%.

Market reaction and supply concerns

Oil futures hold on to gains after the data release. Global Brent crude futures trade at $115.66 a barrel, up $1.78, while U.S. West Texas Intermediate futures rise $2.48 to $102.38 at 11 a.m. ET.

David Russell, global head of market strategy at TradeStation, says energy stockpiles fall more than expected as exports pull supplies away from the U.S. He says declining distillate inventories indicate diesel stocks remain well below seasonal norms, limiting the prospect of near-term price relief, while slower Strategic Petroleum Reserve draws suggest a diminishing supply cushion.

Kpler questions the export figures in the government report, warning that its vessel-tracking systems show lower crude loadings. Matt Smith, the ship tracking firm's lead oil analyst, says the Energy Information Administration appears to overestimate crude exports by about 1 million barrels per day, which he says raises questions about other parts of the weekly balance.

Smith also says the report shows diverging fuel demand patterns, with gasoline inventories building as implied demand weakens and distillate stocks falling as implied demand strengthens. That leaves the market balancing softer gasoline consumption against continued tightness in diesel and other distillate fuels.

Our earlier report on the conflict-driven spike in oil shipping costs explained how surging tanker and insurance rates have become a major new component of crude pricing, lifting fuel and consumer costs worldwide. We noted that attacks and rerouting around key chokepoints were tightening vessel availability and pushing freight costs sharply higher, hitting import-dependent markets and squeezing refiners even as tanker owners benefit from record earnings.

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