The key facts
- US commercial crude oil inventories fell for the fifth consecutive week — to 409.8 million barrels
- Distillate inventories dropped to 99.3 million barrels — the lowest level since May 2003
- On November 4, Brent fell 2.81% to $100.69, and WTI dropped to around $93
Fifth consecutive decline in inventories
US commercial crude oil inventories fell for the fifth consecutive week, reaching 409.8 million barrels. In the seven days ending October 30, storage lost another 900 thousand barrels — versus analysts' expectations of about 200 thousand. The data was published in the weekly report of the US Energy Information Administration (EIA). A week earlier, the volume stood at 410.6 million barrels, and the current level is 4% below the average for the same period over the past five years.
Refining and production are growing, distillates at a two-decade low
At the same time, US refineries increased capacity utilization to 94.5%, processing about 16.7 million barrels per day, while the country's oil production reached 14 million barrels per day. Gasoline inventories fell by 200 thousand barrels, to 209 million. Distillate inventories, including diesel fuel and heating oil, declined more noticeably: over the week they dropped by 3.6 million barrels, to 99.3 million — the lowest level since May 2003. Thus, the drawdown in storage is occurring not because of falling production, but against the backdrop of high refining utilization.
Prices decline despite depleting inventories
Despite the continued depletion of inventories, global prices were falling on November 4: by 18:50 Moscow time, January Brent futures on the London ICE exchange fell 2.81%, to $100.69 per barrel, while WTI dropped to around $93. The decline has continued since the beginning of November: as early as January 2, Brent contracts fell below $111 for the first time since October 29, although a few days earlier they had exceeded $113. According to Reuters, market participants were assessing the consequences of the US midterm elections, in which the Democrats won control of both chambers of Congress, and were also watching prospects for resolving the conflict between Washington and Tehran and the possible resumption of oil supplies from the Persian Gulf.
The Strait of Hormuz factor
According to Life.ru, the situation with the transportation of crude through the Strait of Hormuz continues to influence price dynamics. Earlier, Russian Deputy Prime Minister Alexander Novak explained that a significant part of the rise in oil prices was linked to a sharp increase in the costs of maritime shipping, tanker chartering and cargo insurance: on certain routes these costs increased five- to tenfold.
