EIA inventory has increased sharply, supply concerns have eased, and U.S. oil has fallen by nearly $3 since its high in the past seven years

On Wednesday (October 6) U.S. oil once climbed to $79.78, the highest since November 2014, and fell $1.99 in late trading, or 2.52%, to close at $76.94 per barrel. Burundi oil once hit US$83.47 per barrel, the highest since October 2018, and then fell back. In late trading, it fell US$1.86, or 2.35%, to close at US$80.7 per barrel. An earlier EIA inventory report showed that as of the week of October 1, crude oil inventories increased by 2.345 million barrels and gasoline inventories increased by 3.256 million barrels. At the same time, Russia indicated that it was ready to alleviate the global energy crisis, and oil prices fell sharply.

The EIA inventory report shows that last week US domestic crude oil production increased by 200,000 barrels to 11.3 million barrels per day, recovering from the shutdown caused by the storm more than a month ago, and production rebounded to near the peak during the epidemic, but still far low A record of 13 million barrels per day was set in 2019. The four-week average supply of US crude oil products was 20.743 million barrels per day, an increase of 16.4% over the same period last year. In addition to the strategic reserves of commercial crude oil imported 7,035 million barrels per day last week, an increase of 483,000 barrels per day from the previous week, the highest since the week of July 16, 2021. US crude oil exports fell by 906,000 barrels per day to 2.114 million barrels per day last week, the lowest since the week of July 30, 2021.

Analyst Lucia Kassai believes that many U.S. Gulf Coast refineries are still increasing production capacity during the last week of September, and the refinery utilization rate rose to 88.5% of production capacity. But this should be short-lived, as many fuel manufacturers begin to maintain equipment. Analyst Sheela Tobben said that it is interesting that the domestic crude oil production in the United States increased by 200,000 barrels per day last week, bringing total production back to the level before Hurricane Ida hit. Although Shell announced the resumption of the operation of the Olympus crude oil platform, some offshore rigs are still in a state of suspension. Most of the increase in production this week may come from other places, including shale oil supplies. Both of these conditions are abnormal and may be corrected in the report next week.

The Financial Times quoted US Secretary of Energy Jennifer Granholm's speech at an energy summit on Wednesday as reporting that she would increase the possibility of releasing crude oil from the Strategic Petroleum Reserve and said that "all available tools are being discussed"; Granholm does not rule out Possibility of imposing a ban on crude oil exports. The White House Press Secretary Jane Psaki said that the White House is continuing to monitor the oil market situation. More necessary measures will be taken on the issue of oil prices. Ed Moya, senior market analyst at Oanda Corp., said: "The US's consideration of using reserve oil may mean that oil prices will not get out of control."

Crude oil prices closed on Tuesday at their highest level since 2014, as the surge in natural gas prices stimulated demand for crude oil and refined oil before the winter. Russian President Vladimir Putin said at an energy conference on Wednesday that Russia is ready to help stabilize the global energy market and may export a record amount of natural gas to Europe this year. Gazprom's exports to Europe in the first nine months of this year are close to historical highs. If this rate is maintained for the rest of 2021, it will be a record year.

Natural gas prices in Europe soared to record highs, and coal prices from major exporting countries also hit record highs. The Organization of the Petroleum Exporting Countries (OPEC) and its allies refused to increase production, and concerns about the tight global energy supply have been supporting factors for the recent surge in oil prices. Brent crude oil has soared by more than 50% this year, increasing inflationary pressures and may slow down the recovery after the new crown epidemic.

Some analysts pointed out that the current market is increasingly concerned about cold winter and power shortages, but the global (especially in Europe) natural gas shortage, heating oil and oil-based power generation have become important alternatives, which will lift the fourth quarter of 2021 to 2022. Crude oil demand at the beginning of the year. It is worth paying attention to the inventory status of the global crude oil market. The current indicator is at a low level in the same period in 5 years, which means that the current oil price at 80 US dollars is supportive. If the indicator drops further in the future, oil prices may still rise further.

(U.S. Oil Hour Chart)