On August 28, 2024 yesterday, the US Energy Information Administration (EIA) released its latest Weekly Petroleum Status Report, which showed a modest decline in WTI crude oil inventories. The report showed that crude oil inventories fell by 0.8 million barrels from the previous week, bringing the total to 425.2 million barrels.
What Do We Know?
Current inventory levels are about 4% below the five-year average for this time of year. Despite the decline, inventories are still 2.2 million barrels higher than the same period last year.
Inventories at Cushing, Oklahoma, the delivery point for NYMEX crude oil futures () fell by 0.7 million barrels, bringing the total to 27.5 million barrels.
A smaller-than-expected inventory decline had a mixed effect on the market. Although some analysts had expected a larger drop, the actual numbers resulted in only a small drop in oil prices. Brent crude fell 90 cents to $78.65 a barrel, and West Texas Intermediate (WTI) fell $1.01 to $74.52 a barrel.
Factors Affecting the Report
Imports and Exports: Continued strength in imports and a slight decline in exports contributed to a smaller decline in inventories.
Geopolitical Risks: Geopolitical tensions, particularly in the Middle East, continue to affect crude oil prices. Despite the decline in inventories, concerns about supply disruptions in countries such as Libya and the ongoing conflict between Israel and Hamas have prevented prices from falling further.
Global Demand: Weak demand from China, one of the world's largest oil consumers, is also putting pressure on prices. The expected recovery has yet to materialize, adding to the bearish sentiment in the market.
This latest crude oil inventory report highlights the complex interplay of factors affecting the oil market. Although the modest decline in inventories was less than expected, ongoing geopolitical risks and global demand volatility continue to shape market dynamics. Traders and analysts will be watching these developments closely in the coming weeks.
