Today's Report (10/27/2021)

According to data released Wednesday by the Energy Information Administration, crude oil inventories in the United States increased more than expected last week, while gasoline and diesel fuel supplies decreased.

Crude-oil stockpiles rose by 4.3 million barrels to 430.8 million barrels, and remain about 6% below the five-year average. U.S. crude-oil production was unchanged last week from the previous week, at 11.3 million barrels a day

Oil stored at Cushing, the delivery point for U.S. stocks, fell by 3.9 million barrels from the previous week to 27.3 million barrels, the EIA said in its weekly report.

Gasoline stockpiles dropped by 2 million barrels to 215.7 million barrels, compared with analysts' expectations for inventories to decrease by 1.8 million barrels from the previous week.

Distillate stocks, which include heating oil and diesel fuel, slipped by 432,000 barrels to 125 million barrels, and are now about 8% below the five-year average, the EIA said. Analysts were forecasting a 2.1-million-barrel decline from the previous week.

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.