The Energy Information Administration reported on Wednesday that crude stocks in the United States fell unexpectedly last week as refineries increased output ahead of the winter heating season, benefiting from higher margins due to higher fuel prices.
Crude inventories fell by 2.1 million barrels in the week ending Nov. 12, compared to analysts' expectations of a 1.4 million barrel increase. This was despite the fact that the US released more than 3 million barrels of crude from its strategic reserve for the second week in a row as the Biden Administration sought ways to reduce overall fuel costs.
Gasoline inventories fell by 708,000 barrels, exceeding expectations of a 575,000-barrel drop According to EIA data, distillate stockpiles, which include diesel and heating oil, fell by 824,000 barrels.
Last week, net US crude imports fell by 490,000 barrels per day as exports increased, bringing total exports to 3.6 million BPD.
What Is It?
Provides weekly information on petroleum inventories in the US, whether produced here or abroad. It provides a weekly total of inventories either added or reduced.
What Are The Fundamental Effects?
Energy prices generally rise during periods of economic expansion and fall during recessions. They’re certainly subject to inflationary pressures. Rising prices can impact pricing for products and services. These include heavy industry, transportation, and even retail. It directly affects consumer prices for a number of products.
How Does It Affect The Markets?
During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much.
Some More Insight
Petroleum product prices are determined by supply and demand - just like any other good and service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices - or price increases for a wide variety of petroleum products such as gasoline or heating oil. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much. During a period of sluggish economic activity, demand for crude oil may not be as strong. If inventories are rising, this may push down oil prices.
Crude oil is an important commodity in the global market. Prices fluctuate depending on supply and demand conditions in the world. Since oil is such an important part of the economy, it can also help determine the direction of inflation. In the U.S., consumer prices have moderated whenever oil prices have fallen, but have accelerated when oil prices have risen.