Unexpected Rise in US Oil Stocks
US crude oil inventories rose by 2.479 million barrels to 407 million barrels for the week ending July 31. This result defied market expectations, which had anticipated a decline of approximately 1.5 million barrels. The EIA released the weekly report on Wednesday, August 5.
Inventories at the Cushing, Oklahoma, delivery hub surged by 2.356 million barrels. The stock build at this WTI contract delivery point serves as a bearish signal, indicating an increase in domestic crude supply. A drop in refinery activity of 183,000 barrels per day and a rise in net imports also contributed to the inventory accumulation.
However, fuel product categories showed tighter conditions. Gasoline inventories fell by 1.643 million barrels to 209.7 million barrels, while distillate stocks—including diesel and heating oil—plummeted by 3.473 million barrels to 107.2 million barrels. The decline in distillates contrasted sharply with market forecasts, which had anticipated an increase.
The data presents mixed signals for oil prices. Rising crude stocks tend to be bearish for WTI, yet the sharp drops in gasoline and distillates suggest that demand for finished products—or distribution activity—remains robust. Oil price movements also continue to be influenced by Houthi threats in the Red Sea and developments regarding negotiations over the Strait of Hormuz. Prior to the EIA release, Brent was trading around US$80.10 per barrel, and WTI around US$75.93.
Newsmaker Analysis: The EIA data could cap oil price gains, given the simultaneous rise in crude and Cushing stocks. WTI, having failed to hold above US$76, may retest the US$75–US$74 range, while Brent risks sliding toward US$79–US$78. However, the significant drop in distillate stocks and the risk of attacks in the Middle East could limit selling pressure. Oil has the opportunity to strengthen again if geopolitical developments worsen or shipping disruptions spread.
Source: Newsmaker.id
