- U.S. crude oil reserves surged by 8.7 million barrels, surpassing the expected 1.9 million barrels due to low refinery activity and increased imports.
- Oil production rose to 13.48 million barrels daily, while refinery utilisation remained below normal at 84.5%.
- Following the EIA report, West Texas Intermediate (WTI) crude prices dropped 1.62%, reflecting market concerns over a potential short-term oil surplus.
U.S. crude oil inventories surged by 8.7 million barrels last week, exceeding market expectations. Analysts predicted a more minor increase of 1.9 million barrels, making the sharp rise surprising. The U.S. Energy Information Administration (EIA) reported this increase, highlighting key drivers behind the growth.
Crude reserves rose due to lower refinery activity and higher imports. U.S. oil production climbed to 13.48 million barrels per day, up from 13.24 million the previous week. Refineries operated at 84.5% capacity, slightly above the prior week but below normal levels.
John Kilduff, an analyst at Again Capital, linked the lower refinery output to seasonal maintenance and adverse weather. Refineries processed less oil, causing the stock buildup.
Crude imports jumped by 7.24%, further boosting inventories. At the same time, U.S. oil exports surged by 17.50%, adding to market supply. Despite strong demand for heating fuel due to cold weather, it did not offset the overall stock increase.
The EIA report drove down crude oil prices. West Texas Intermediate (WTI) crude for March delivery dropped 1.62%, settling at $71.08 per barrel. This decline reflects concerns over a short-term crude oil surplus.
The sharp rise in inventories, combined with increased imports and ongoing production growth, raises uncertainty in the market. While exports also grew, worries about demand persist as refinery utilisation remains low.
With inventories rising, analysts expect oil prices to face further downward pressure. Refinery activity and export volumes will determine price trends in the coming weeks. As global demand fluctuates, U.S. stock movements will continue influencing market dynamics.