US crude inventories slide 3.186M barrels, much larger than forecast

• The previous week had shown an increase of 922K barrels.
• Gasoline inventories rose by 382K barrels, versus an expected decline of 1,658K.
• Distillate stocks fell by 42K barrels, against a forecast drop of 2,111K.

Before the release, WTI crude was trading 45 cents higher at $89.89, within a daily range of $89.33 to $90.98. Attention has shifted back to the Middle East after Houthi militants struck three Saudi pumping stations. Earlier, there were also unconfirmed reports of an explosion in the Strait of Hormuz.

In a separate statement, the IEA said its member nations backed faster action to release previously pledged reserves as soon as possible. The members also prioritized the release of diesel stockpiles.

Data released late yesterday by the American Petroleum Institute showed:

• Crude stocks declined by 2,090K barrels.
• Gasoline inventories decreased by 1,370K barrels.
• Distillate supplies increased by 461K barrels.

The API data had already flagged a surprise draw, so the EIA figure was not entirely unexpected but remains clearly bullish. In contrast, the IEA statement and the potential for diesel reserve releases are negative for both crude and diesel, and that is the market’s current reaction.

For context, the US Energy Information Administration’s weekly petroleum report is a critical release for oil traders, offering a snapshot of supply, demand and inventory levels in the world’s largest oil-consuming economy. It is usually published on Wednesdays at 10:30 a.m. Eastern, though holiday weeks can shift the schedule.

The headline figure is the weekly change in commercial crude inventories. A larger-than-expected draw typically supports oil prices, signaling tighter supply, while a surprise build can pressure the market. However, the details are important: shifts in imports, exports and refinery activity can cause inventory changes without a fundamental shift in consumption.

Traders also track gasoline and distillate inventories, refinery utilization and stocks at Cushing, Oklahoma, the delivery point for WTI futures. Seasonal maintenance, weather disruptions and the timing of tanker arrivals can make weekly readings volatile, so trends over several weeks often provide a clearer picture.

An important distinction is that the headline crude figure excludes the Strategic Petroleum Reserve. Changes in those government-held inventories are reported separately. Drawdowns add additional crude to the market, potentially offsetting commercial inventory declines or contributing to builds. Consequently, commercial stocks alone may understate the total depletion of combined commercial and strategic supplies.

The SPR provides an emergency buffer against supply disruptions. Releases have occurred during wars and other emergencies, including the 180-million-barrel withdrawal announced in 2022 following Russia’s invasion of Ukraine. In March, President Trump authorized a 172-million-barrel SPR release as part of a coordinated 400-million-barrel international response to disrupted supplies.

By September 25, SPR holdings had fallen to 283.8 million barrels from 415.4 million just before the war—a net decline of approximately 131.7 million barrels, or 32%.