The U.S. Energy Information Administration released its Weekly Petroleum Status Report on June 10. According to the data, the amount of crude oil, and refined products in U.S. commercial storage facilities climbed again last week. At the same time, demand for refined products remains well below pre-coronavirus levels. 

Crude inventories, imports climbing again

As of June 5, U.S. commercial storage facilities held 538.1 million barrels, 14% above the five year average and up 5.7 million barrels from the prior week, ended May 29. This was a reversal from the prior week's 2.1 million barrel decline. 

The majority of of the increase in crude oil inventories was the increase in crude imports. Approximately 3.45 million barrels per day of crude oil were imported last week, about 600,000 barrels per day higher than the week ended May 29. This is still below the average of 4.17 million barrels last year, but contributed 4.2 million additional barrels of oil to U.S. inventories over the past week. 

Screen shot of oil and gas prices.

Image Source: Getty Images

Refining activity increased faster than the market could soak it up

Refined products like gasoline, jet fuel, and diesel (distillate) inventories continue to climb as refiners ramp up activity even with demand still down. Refiners processed an average 13.5 million barrels of oil per day last week, up 178,000 barrels per day, producing 8.1 million barrels per day of gasoline and 4.8 million barrels per day of distillate. This was substantially higher than the four week average, and also well above the four week average refined products refiners have supplied to the market. 

As a result, refined products in storage increased. Gasoline inventories increased just under 1 million barrels, up 11% from the five year average, distillate inventories surged 29% above the five year average on a 1.6 million-barrel increase. 

Total petroleum inventories up almost 10 million barrels combined

As a result of increased imports and domestic production that still exceeds demand, the glut of excess supply in the U.S. increased 9.7 million barrels last week. Refiners increased their output, but that output increase was not matched by increased consumption of what it could supply. 

After initially falling following the release of the EIA report, crude oil futures are now climbing in afternoon trading following the conclusion of two days of meeting by Federal Reserve officials, and public statements from Fed Chief Jerome Powell that interest rates would remain low for the foreseeable future. 

Many oil stocks continued to trade lower. Oil giant BP (NYSE:BP) recently announced it would shrink its global workforce by 15%, laying off 10,000 workers, and the reality of a protracted downturn has reversed a recovery in oil stocks since late April. 

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