Inventory Surprise: API Reports 1.64 Million Barrel Increase as Oil Prices Fluctuate

Key Takeaways:

• Crude Oil Prices: Brent and WTI crude oil futures are down, driven by higher-than-expected U.S. inventory levels and increased production.
• U.S. Inventory Report: U.S. crude oil inventories rose by 1.64 million barrels last week, going beyond the forecast of 0.7 million barrels.
• Supply & Demand Dynamics: Global oil demand is expected to grow by 1.2 million barrels per day in 2025.

Petroleum Price: Crude Oil Futures Decline

• Crude oil futures traded lower on Wednesday morning as an industry report showed an increase in inventories in the U.S. for the week ended October 18.
• December Brent oil futures were at $75.94, down by 0.13 percent, while December crude oil futures on WTI (West Texas Intermediate) were at $71.64, a decrease of 0.14 percent.
• November crude oil futures were trading at ₹6,042 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday, compared to the previous close of ₹6,040, reflecting an increase of 0.03 percent. December futures were trading at ₹6,024, down from the previous close of ₹6,028, representing a decrease of 0.07 percent.

Petroleum Demand and Supply: U.S. Crude Oil Inventories Rise

• According to the American Petroleum Institute (API), U.S. crude oil inventories increased by 1.64 million barrels for the week ended October 18. The market was expecting an increase of around 0.7 million barrels. The market is awaiting the release of the official crude oil inventories data from the U.S. Energy Information Administration (EIA) later on Wednesday.
• ING Think’s Commodities Feed for Wednesday noted that oil prices finished stronger on Tuesday, supported by little fresh development. Warren Patterson, Head of Commodities Strategy at ING Think, and Ewa Manthey, Commodities Strategist, reported that ICE Brent settled almost 2.4 percent higher on the day, climbing back above $76 a barrel.
• Prices, however, were under some pressure in early morning trading on Wednesday. Tuesday’s strength may have been due to the lack of an outcome from U.S. Secretary of State Antony Blinken's visit to Israel.

Petroleum News: Global Oil Market Updates

• OPEC+ is set to restore output starting in December, which could weigh on prices in the future. In the U.S., weekly oilfield production increased by 100,000 barrels per day, reaching a record 13.5 million bpd. U.S. crude oil inventories fell by 2.192 million barrels in the week ending October 11, 2024, surpassing expectations for a 2.3 million barrel increase.
• Gasoline and distillate stockpiles also saw significant declines, indicating tighter supplies in the U.S. On the demand front, the U.S. Energy Information Administration (EIA) revised its global oil demand growth forecasts for 2025, citing weaker economic activity in China and North America. World oil demand is expected to grow by 1.2 million barrels per day next year, lower than prior forecasts.

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Expert Opinion on Petroleum Market Trends

• The market expected U.S. crude oil inventories to increase by approximately 0.7 million barrels, but the actual reported increase was 1.64 million barrels for the week ended October 18. Despite a previous rise in oil prices, crude oil futures were trading lower on Wednesday morning, reflecting pressure on prices following the inventory data.
• There is uncertainty around geopolitical tensions, particularly between Israel and Iran, which could affect market behavior but have not yet impacted oil supply. Goldman Sachs predicted that oil prices are likely to average $76 per barrel in 2025, reflecting a moderate crude surplus and spare capacity among major producers. The note also mentioned that medium-term risks to prices are skewed moderately to the downside due to high spare capacity and potential broader trade tariffs.