While oil prices keep rising on mounting geopolitical tensions in Iran, the production glut refuses to go away, and as today's DOE report showed, there was a material increase across almost all products, with the exception of Distillates which were flat. Of note, amid expectations for a modest crude draw, we saw a 3.4MM barrel increase, the largest since the start of November. 

Here is what the EIA reported in its weekly inventory report

• Crude +3.391MM, Exp.-1.682MM
• Gasoline +8.977MM, Exp. +2.0MM
• Distillates -29K, Exp. -662K
• Cushing +745K

Of note here is that while we saw a sizable build in most products, with Crude rising the most in two months, it was gasoline where the stocking was most notable: the nearly 9 million barrels added were the most since December 29, 2023.

Some more details:

Crude Build

• Nationwide crude stockpiles rose to 422.4 million barrels. The weekly gain of about 3.4 million barrels is the largest build since early November. Stockpiles at Cushing, Oklahoma, continue to climb. The storage hub has seen a rise in inventories for the fourth consecutive week. Stocks now sit at about 23.6 million barrels, the highest since September.

Imports

• The build in crude inventories can be partly explained by an increase in imports. They rose to the highest since November of 2024. Imports from the Middle East edged higher, driven by a 62% increase in the amount of crude arriving from Iraq. Inflows from Brazil, Mexico, Colombia and Ecuador all jumped.

Refinery Runs

• Refinery runs have now risen in 9 of the past 10 weeks countrywide, inching closer to the highest since the pandemic. In the Midwest, refineries are processing the most crude on record on a seasonal basis. West Coast refinery runs are now at the highest level since late-September.

While Cushing draws reversed for a 4th consecutive week, stocks remain not too far from tank bottoms.

Yet there is some hope that US production is finally moderating: while US Crude production hovers near record highs despite the continuing decline in rig count, last week saw a notable drop in total production, dropping by 58K barrels to 13.753 million, the lowest since the end of October.

Despite the sizable build in crude stock, WTI is holding gains as attention remains glued to what happens in Iran next...

On the bright side, the broadly weaker trend on crude oil prices has dragged gas (pump) prices down to their lowest since May 2021...

While it's not exactly 'drill, baby, drill', it's certainly what Trump wanted (the question is, will the lower price push shale producers to cut production... and round and round we go).