U.S. crude stockpiles extend 8-week slide on 9.12 million barrel draw

The American Petroleum Institute reported crude stockpiles fell 9.12 million barrels last week, more than triple the 2.9 million barrel draw analysts had forecast, pointing to tightening supply conditions.

"These sustained draws reflect a market where export demand is absorbing domestic production while refinery runs remain elevated," said Robert Yawger, director of energy futures at Mizuho Securities, who had forecast a 2 million barrel decline.

Gasoline inventories fell 1.19 million barrels, while distillate stockpiles — which include diesel and heating oil — rose 1.32 million barrels, the API data showed. Analysts surveyed by The Wall Street Journal had expected gasoline to decline by 600,000 barrels and distillates to fall by 500,000 barrels. Refinery capacity use likely edged up to 94.8%, according to the survey.

The eight-week drawdown has pushed crude inventories toward levels the U.S. Energy Information Administration recently warned could approach multi-decade lows, a scenario that would provide a floor under WTI crude prices even as broader macroeconomic concerns weigh on the commodity. The EIA is scheduled to release its official weekly inventory data Wednesday at 10:30 a.m. EDT.

The API's reported draw of 9.12 million barrels far exceeded the range of analyst estimates compiled by the Journal, which ran from 1.4 million to 7.1 million barrels. Only Tradition Energy's forecast of a 7.1 million barrel decline came close to the actual figure.

The sustained inventory decline comes as U.S. crude exports remain strong, with overseas buyers absorbing a growing share of domestic production. The last time stockpiles fell for eight consecutive weeks was in early 2024, when a combination of strong export demand and OPEC+ production cuts tightened the market. During that period, WTI crude rose roughly 15% over the two-month drawdown window.

The inventory data contrasts with a broader risk-off tone in oil markets this week. WTI crude fell to a seven-week low Monday as geopolitical risk premiums unwound after reports that Iran and Israel had halted attacks, according to Reuters. The simultaneous decline in both crude prices and stockpiles creates an unusual dynamic — sustained draws typically support prices, but macro headwinds from easing Middle East tensions and demand concerns are offsetting that support.

Gasoline inventories have declined alongside crude for multiple weeks, which could lift margins for refiners heading into the summer driving season. The peak demand period typically runs from Memorial Day through Labor Day, and lower gasoline stockpiles entering that window tend to support crack spreads. Distillate inventories rose counter-seasonally, a build that may ease concerns about heating oil supply ahead of winter, though the current stock level remains below the five-year average for this time of year.

If the EIA confirms the API's reading Wednesday, commercial crude inventories would fall to approximately 430.8 million barrels or below. The EIA's own projections suggest stockpiles could continue declining through the third quarter if export demand holds at current levels and domestic production growth remains constrained by the rig count, which has been flat to declining over the past three months.

This article is for informational purposes only and does not constitute investment advice.