Crude oil prices retreated from a three-month high on Wednesday, weighed down by bearish signals from the Energy Information Administration (EIA) report and broader market uncertainties. A stronger dollar index, partly driven by impending U.S. policy changes and ongoing global trade tensions, has created a bearish outlook for energy demand, particularly in light of a sustained slowdown in China.
The latest EIA weekly report showed that U.S. crude oil inventories fell less than expected, while gasoline and distillate supplies exceeded projections. U.S. crude oil stocks, including those in the Strategic Petroleum Reserve (SPR), declined by 700,000 barrels for the week ending January 3, following a drop of 900,000 barrels the previous week. Excluding SPR inventories, commercial crude stocks decreased by 1 million barrels, short of the anticipated 2 million-barrel decline reported by Bloomberg.
Conversely, SPR stocks rose by 200,000 barrels, following a 300,000-barrel increase in the prior week. Overall, crude oil inventories fell by 0.1% week-on-week but remained 2.7% higher than the same period last year. Commercial crude oil inventories were about 6% below the five-year average for this time of year.
Gasoline stocks surged by 6.3 million barrels, far exceeding the expected 500,000-barrel increase. Although gasoline inventories rose 2.7% week-on-week, they were 3% lower than the corresponding period a year ago. Distillate stocks also increased significantly, rising by 6.1 million barrels compared to the anticipated 500,000-barrel gain. While distillate inventories were up 4.9% week-on-week, they remained 2.6% lower year-on-year.
Refinery operations showed slight improvement, with capacity utilization climbing to 93.3%, up from 92.7% in the previous week.
