Crude oil prices declined today following a report from the U.S. Energy Information Administration (EIA) that revealed an inventory increase of 5.8 million barrels for the week ending October 4.
This increase contrasts with a build of 3.9 million barrels from the previous week and follows an estimated rise of 10.9 million barrels reported by the American Petroleum Institute on Tuesday.
The surge in inventory levels weighed on oil prices, which were already unstable after traders’ hopes for additional stimulus measures from China were dashed. The Chinese government appears to believe that the current stimulus is sufficient.
Additionally, the EIA noted a decline in gasoline inventories and a drop in middle distillate stocks for the same week.
Gasoline inventories decreased by 6.3 million barrels, while production averaged 10.2 million barrels per day. This is in contrast to a build of 1.1 million barrels the previous week, when production averaged 9.6 million barrels daily.
Middle distillate inventories fell by 3.1 million barrels, with production averaging 5.0 million barrels per day. This compares to a draw of 1.3 million barrels and daily production of 4.8 million barrels in the prior week.
Earlier this week, the EIA also released an update on oil and gas, revising down its oil demand forecasts for both the U.S. and global markets for 2025. The agency now expects global demand to increase by approximately 1.2 million barrels per day next year, a reduction of 300,000 barrels per day from previous estimates. U.S. demand is projected to rise by 100,000 barrels per day less than earlier expected, reaching 20.5 million barrels daily.
Despite this, it is important to note that the EIA has consistently forecasted weaker oil demand throughout the year. However, in September, it reported that actual data from May and July indicated a surge in demand to multi-year seasonal highs.
Earlier in the day, oil prices had remained relatively stable as concerns over rising tensions in the Middle East eased, leading to hopes for a ceasefire between Israel and Hezbollah. An analyst pointed out that geopolitical events have been impacting oil markets.
Piryanka Sachdeva from Phillip Nova told Reuters, “The ongoing dilemma of ‘Middle Eastern headlines’ swinging between ‘ceasefire talks’ and ‘further escalation in attacks’ has distracted investors from the actual situation. Oil markets are caught in a cycle of ‘buying the rumor’ while overlooking the real fundamentals that should be considered.”
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