The EIA reported Wednesday that U.S. commercial crude oil inventories dropped by 3.3 million bbl to 433.6 million bbl in the week ending March 21, despite increased refinery activity. The figure was below the 4.6 million bbl inventory draw reported by API on Monday, March 25, for the same reference week.
Downstream, total motor gasoline inventories decreased by 1.4 million bbl to 239.1 million bbl in the reference week, 2% above the five-year average.
Distillate fuel stocks fell 400,000 bbl to 114.4 million bbl in the reference week, which was 7% below the five-year average.
The API reported that gasoline supply decreased by 3.3 million bbl, and distillate fuel supply declined by 1.3 million bbl last week.
Refineries processed 15.8 million bpd last week, an increase of 87,000 bpd from the prior week, while refinery utilization was steady at 87.0% week over week.
The oil futures market hike Wednesday was supported by news that Russia and Ukraine had agreed to stop attacks in the Black Sea, which have disrupted oil exports and affected global oil prices, the White House said.
The White House said Tuesday that Russia and Ukraine reached an agreement to ensure safe navigation, eliminate the use of force, prevent the use of commercial vessels for military purposes in the Black Sea, and ban strikes against energy facilities in both countries.
However, it is unclear whether the United States is willing to lift sanctions imposed on Russian oil trade after Russia invaded Ukraine in 2022 or if the price cap on Russian oil, set by the G7 the same year, will be eliminated following this agreement.
As the Trump administration continues targeting Iranian and Venezuelan oil trade with additional sanctions, oil futures prices are expected to be under pressure.
“While restricting Iranian oil shipments could tighten the market in the short term, Saudi Arabia and other large OPEC+ producers could easily ramp up their production to make up for lost Iranian flows,” said Fawad Razaqzada, a market analyst at Forex.
Early this month, the eight OPEC+ countries that previously announced additional voluntary adjustments in April and November 2023 reaffirmed their December 2024 decision to add 2.2 million bpd to the global markets beginning April 1.