- U.S. commercial and strategic crude oil inventories saw a significant weekly decrease of 17.2 million barrels to 758.5 million barrels, marking the tenth consecutive week of decline and reaching the lowest level since 1985.
- Cushing, Oklahoma's crude oil delivery hub inventories fell by 1.6 million barrels to 20.03 million barrels, dropping to the lowest level since 2014 and nearing the operational baseline.
- The surge in external demand due to geopolitical conflicts led to an unexpected reduction in commercial inventories, with U.S. refinery capacity utilization climbing to 96.7%, boosting the gains in Brent and U.S. crude oil futures.
Total Inventory Drops to Historic Low Amid Geopolitical Risk Premium
The latest report from the U.S. Energy Information Administration (EIA) released on Wednesday shows that U.S. crude oil inventories recorded a decline for the tenth consecutive week amid surging overseas demand. Total crude oil inventories, including commercial stocks and the Strategic Petroleum Reserve (SPR), decreased by 17.2 million barrels in a week, reducing the overall scale to 758.5 million barrels, the lowest record since March 1985. Since the outbreak of geopolitical conflicts, many countries have shifted their procurement sources to U.S. crude oil and related petroleum products to fill supply gaps, leading to a cumulative consumption of 96.25 million barrels of U.S. crude oil, forming the main macro background of the current global energy market.
Unexpected Commercial Inventory Consumption and Tightening at Cushing
In the week ending June 12, U.S. commercial crude oil inventories, excluding government strategic reserves, decreased by 8.3 million barrels, falling to 418.2 million barrels, significantly exceeding the 4.6 million barrels predicted by Reuters survey analysts. Meanwhile, inventories at the Cushing, Oklahoma crude oil delivery hub (USOICC=ECI), a core benchmark for U.S. crude oil pricing, decreased by 1.6 million barrels, bringing the total down to 20.03 million barrels. This key area's reserves have reached the lowest level since 2014 and are nearing the technical operational baseline, which may provide further upward support for physical delivery and the spread structure in the short term.
High Refinery Utilization and Oil Prices Regain Upward Momentum
The inventory report is generally bullish, driving international crude oil futures to continue their upward trend during the session. As of 14:59 GMT, global benchmark Brent crude oil futures (BRN1!) were at $80.62 per barrel, up $1.66; U.S. crude oil futures (CL1!) rose $1.80 to $77.85 per barrel. Corresponding to the rise in oil prices is the full-scale effort of downstream refineries. U.S. refineries increased crude oil processing by 2.3 million barrels per day, with overall capacity utilization up 1.4 percentage points to 96.7%. Refinery utilization rates in the Midwest and West Coast regions both reached their highest levels since 2023, reflecting the dual drive of refining profits and seasonal demand.
Divergent End-User Demand and Decline in Cross-Border Trade Flows
On the consumption side, the total supply of refined products, a core indicator, increased slightly by 85,000 barrels per day to 20.685 million barrels per day last week; gasoline consumption was strong, increasing by 481,000 barrels per day to 9.21 million barrels per day, leading to a decrease in gasoline inventories by 906,000 barrels to 214.2 million barrels. However, distillate inventories, including diesel and heating oil, increased by 1 million barrels to 103.1 million barrels, contrary to the market's expected decrease of 470,000 barrels. In terms of import and export trade, U.S. net crude oil imports fell by 241,000 barrels per day, and crude oil exports decreased by 513,000 barrels per day to 4.33 million barrels per day. If geopolitical tensions do not ease in the future and downstream consumption peaks continue, the tight supply-demand state of the global energy market may pose a higher valuation reassessment risk for forward market pricing.
