Decrease in Crude Reserves by 2.5 Million Barrels Despite Import Surge

• Domestic oil output rose from 13.2 million barrels per day to 13.3 million barrels per day.
• The Strategic Petroleum Reserve expanded from 355 million barrels to 355.6 million barrels.
• Working gas in storage decreased by 154 billion cubic feet from the prior week.  

On January 18th, the EIA published its Weekly Petroleum Status Report, revealing a 2.5 million barrel decrease in crude inventories compared to analyst projections of a decrease of 0.3 million barrels. This brings crude inventories to about 3% below the five-year average for this time of year.

Motor gasoline inventories grew by 3.1 million barrels, surpassing the anticipated increase of 2.15 million barrels. Crude oil imports rose by 1.2 million bpd, averaging 7.4 million barrels.

Domestic oil production climbed from 13.2 million bpd to 13.3 million bpd, indicating a drive for market share as OPEC+ members reduce their production.

The U.S. continued to acquire oil for reserves, leading to a growth in the Strategic Petroleum Reserve from 355 million to 355.6 million barrels.

Following the EIA data release, WTI oil settled above the $73.00 level, reflecting a decrease in crude inventories despite a notable rise in crude oil imports. Traders' attention shifted to Brent oil, which attempted to settle above the 78.50 level.

The surge in domestic oil production may warrant caution among traders, as it could negatively impact oil markets. However, a substantial effect on oil price dynamics would likely require domestic oil production to reach the 13.5 million bpd level.

The EIA also released its Weekly Natural Gas Storage Report, indicating a 154 Bcf decline in working gas compared to the analyst consensus of -140 Bcf.

Natural gas faced continued pressure post EIA data release, with current efforts to settle below the $2.75 level as traders monitor warm weather forecasts.