U.S. Crude Oil Market Analysis January 10th 2024

The first week of January 2024 has brought significant developments in the US petroleum market, as reflected in the latest weekly petroleum data released by the Energy Information Administration (EIA). In this comprehensive analysis, we will delve into key indicators, such as crude oil inventories, refinery inputs, production, and imports, to provide valuable insights for investors, industry stakeholders, and enthusiasts.

Crude Inventory Dynamics:

The standout figure in the latest report is the unexpected surge in U.S. commercial crude oil inventories, which increased by 1.34 million barrels, sharply contrasting with the anticipated decrease of 200,000 barrels. This unexpected rise brings the total to 432.4 million barrels, approximately 2% below the five-year average for this time of the year. The crude inventory dynamics will undoubtedly impact market sentiment and oil prices in the short term.

Cushing and Distillate Movements:

Cushing, the vital hub for U.S. crude oil storage, saw a notable decrease of 506,000 barrels. On the other hand, distillate fuel inventories experienced a substantial increase of 6.5 million barrels, positioning them around 4% below the five-year average for this time of the year. This duality in inventory movements underscores the intricate balance within the petroleum market, warranting careful monitoring of both supply and demand factors.

Refinery Operations:

During the week ending January 5, 2024, U.S. crude oil refinery inputs averaged 16.5 million barrels per day, indicating a slight decrease of 161,000 barrels per day from the previous week. Refineries operated at 92.9% of their capacity, a crucial metric reflecting the industry's ability to meet demand. Gasoline production saw an increase, averaging 9.7 million barrels per day, while distillate fuel production decreased, averaging 5.2 million barrels per day. These trends underscore the dynamic nature of refinery operations, responding to market demand fluctuations.

Imports and Their Implications:

Crude oil imports witnessed a decrease of 654,000 barrels per day from the previous week, averaging 6.2 million barrels per day. However, over the past four weeks, crude oil imports remained robust, averaging 6.5 million barrels per day, reflecting an 8.2% increase from the same period last year. These import dynamics have the potential to impact domestic production and influence global oil prices.

Product Inventories and Supplied Trends:

Total motor gasoline inventories increased by 8.0 million barrels from the previous week, slightly exceeding the five-year average. Distillate fuel inventories also surged by 6.5 million barrels, positioning them about 4% below the five-year average. Meanwhile, total products supplied over the last four weeks averaged 20.2 million barrels per day, showcasing a 1.6% increase from the same period last year. Motor gasoline product supplied increased by 3.2%, while distillate fuel product supplied decreased by 4.2%, emphasizing the evolving demand patterns within the energy landscape.

ABCAP Conclusion:

The weekly petroleum data for the week ending January 5, 2024, paints a complex picture of the U.S. oil and gas market. The unexpected increase in crude inventories, coupled with nuanced movements in Cushing, distillate fuel, and refinery operations, necessitates a cautious approach for industry participants. As we navigate the ever-changing landscape, monitoring supply and demand dynamics, refining capacities, and global geopolitical events will be paramount in understanding and predicting market trends. Investors and industry experts alike should remain vigilant in the coming weeks as the market reacts to these influential factors.

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