Following to an EIA report, it has been revealed that the United States has initiated the process of purchasing oil for its reserves.

As traders direct their attention to the new buyer in a tight market, oil prices are testing new highs.

Key Insights

• In the previous week, there was an increase of 5.9 million barrels in crude inventories.
• Producers responded to the rise in oil prices by increasing domestic oil production from 12.2 million barrels per day (bpd) to 12.6 million bpd.
• The Strategic Petroleum Reserve of the United States has expanded from 346.8 million barrels to 347.8 million barrels, as the country has commenced the process of purchasing oil for its reserves.

On August 9, the Weekly Petroleum Status Report by the Energy Information Administration (EIA) revealed that crude inventories in the United States witnessed a significant growth of 5.9 million barrels compared to the previous week. This surpassed analysts' expectations of a 0.57-million-barrel increase. However, the current levels of crude oil inventories are slightly below the five-year average for this time of the year.

Motor gasoline inventories experienced a decline of 2.7 million barrels, while distillate fuel inventories decreased by 1.7 million barrels. Crude oil imports remained steady at an average of 6.7 million barrels per day, matching the previous week's figures.

The report also emphasized the strong growth in domestic oil production, which rose from 12.2 million barrels per day to 12.6 million barrels per day. This increase in production was supported by the rise in oil prices.

Furthermore, the Strategic Petroleum Reserve witnessed an increase from 346.8 million barrels to 347.8 million barrels, signifying the initiation of oil purchases for the country's strategic reserves. However, the reserve levels remain exceptionally low compared to historical standards.

Following the release of the EIA report, WTI oil prices tested new highs near the $84.50 level, while Brent oil reached the $87.50 level. The market sentiment remains bullish as traders are more focused on recent production cuts from Saudi Arabia and Russia, while overlooking concerns about an impending recession.