Crude Oil Market Report: New All-Time High Inventory Record

For the week ending 5 June 2020, US commercial crude inventories increased 5.7m to 538.1m. The week saw another build in the US Strategic Petroleum Reserve (SPR), which increased 2.2m to 650m. The SPR has increased 15m over the past two months. US crude production declined slightly (100,000 b/d) to 11.1 mb/d for the week. US production has now declined a total of 2.0 mb/d since peaking (at 13.1 mb./d) in early March. Net crude imports increased sharply for the week to 4.425 mb/d, with exports declining to 2.439 mb/d down 355,000 b/d. Finally, gasoline inventories increased 0.9m to 258.7m.

Last week the US commercial crude inventories struck an all-time high, eclipsing the previous record set in mid-March 2017. This event is all the more striking considering, over the past two months, the US has added approximately 15m barrels of crude to the SPR. The fact that both commercial inventories and the SPR continue to expand while production is declining is a worrying development. Moreover, with oil trading in the high $30's/low $40's, several US shale producers have announced that they will uncap wells and restart production.

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Richard Soultanian

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