U.S. Crude Oil Inventories Drop for 11th Straight Week

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Refinery runs and outages are on the rise, and U.S. commercial stockpiles are dwindling. Market anxiety remains, though crude oil prices are flirting with pre-war levels.

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Refinery Issues Adding Up

The U.S. market saw crude oil inventories decline for the 11th straight week, while refinery runs and outages increased and oil prices were lingering close to pre-war levels on Thursday.

The U.S. Energy Information Administration (EIA) in a weekly report found refinery runs were down 81,000 barrels per day (bpd) over the seven-day period ending June 19. "Similarly, IIR Energy reported crude unit outages increased 112,000 bpd week-on-week," Industrial Info Resources reported in its own weekly review.

IIR Energy reported outages were higher in all of the Petroleum Administration for Defense Districts (PADDs), apart from PADD 4, the Rocky Mountain region.

In PADD 1, the East Coast, refiner Monroe is still dealing with the outcome of a June 16 process leak that shut down parts of its Trainer Refinery in Pennsylvania. Some units could return online before the week is out, though a pump fire Thursday could complicate restart efforts.

Industrial Info Resources offers more information on the Trainer Refinery in its Global Market Intelligence (GMI) Petroleum Refining Plant and Project databases, where readers can find details--including construction schedules, investment values and necessary equipment--in a plant profile.

In PADD 2, the Midwest, BP plc suffered an undisclosed issue June 18 that brought down parts of its 430,000-bpd refinery in Whiting, Indiana. That was resolved by Sunday, however. Apart from mechanical issues, Whiting has been under staffing pressures after United Steelworkers members were locked out in March over stalled labor talks. Readers can consult a detailed plant profile.

In PADD 3, the U.S. Gulf Coast, TotalEnergies was able to restore power at its refinery in Port Arthur, Texas, after an electrical substation lost power due to a lightning strike on June 19. The facility could be returned online on Monday. PADD 5 saw minor disruptions in Hawaii. Readers can learn more from a detailed plant profile.

Despite those hiccups, U.S. crude oil inventories continued to plummet. The EIA in its weekly report found commercial crude oil inventories declined 6.1 million barrels over the week, falling to 7% below the five-year average. Volumes in the Strategic Petroleum Reserve drained 2.6% over the week to reach 331.2 million barrels.

The strategic reserve, tapped in a coordinated international response during the height of the conflict between the U.S. and Iran, is more than halfway depleted, showing supply-side buffers are scarce.

By the Numbers

• 2.6% week-on-week decline in SPR
• 112,000 bpd weekly increase in U.S. refinery outages

U.S. Oil Prices Below $70 per Barrel

Nevertheless, crude oil prices continue to drift away from the war-time highs, which were well above $100 per barrel. West Texas Intermediate (WTI), the U.S. benchmark for the price of crude oil, was trading at $69.50 per barrel early in the Thursday session. WTI closed at $66.96 on the last trading day of February before the start of the war.

Meanwhile, a recent report from economists at the Federal Reserve Bank of Dallas found the U.S. oil market was less vulnerable to supply shocks than it was during the latter part of the 20th century.

"It is widely believed that the U.S. economy has become less vulnerable to such disruptions, as it has reduced its dependence on oil and changed from a major net oil importer to a net oil exporter," the authors wrote.

Elsewhere, Michael Plante, an assistant vice president at the Dallas Fed, said that costs for upstream services increased "dramatically," with more than 60% of the respondents to its June survey pointing to inflationary cost pressures.

The conflict between the U.S. and Iran seems to be winding down, and traffic is moving through the Strait of Hormuz under the terms of a temporary cease-fire agreement that lasts through August. Survey respondents weighed in between June 9 and June 17, a period that saw U.S. President Donald Trump threaten both escalated airstrikes and peace prospects via social media.

"Markets can price risk, but they can't price a tweet," one respondent said. "The whiplash from diplomacy-by-social-media has become the single most unpredictable input in our planning. We don't need certainty about the future, just certainty that policy won't change between the morning and the afternoon."

Key Takeaways

• Markets relaxed as Middle East tensions ease
• Energy firms remain anxious, however

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).