Oil inventories drop...

US oil inventories drop for sixth week in a row

By Matt Egan

The oil market’s shock absorbers continue to shrink as the Strait of Hormuz remains paralyzed.

Crude oil stockpiles in commercial storage declined by an additional 8 million barrels last week, marking the sixth straight weekly drop, according to federal data released Wednesday.

Oil executives, analysts and traders have warned that these stockpiles are falling at an alarming pace to cushion the blow from the war with Iran.

According to the Energy Information Administration, total crude oil inventories, including emergency storage at the Strategic Petroleum Reserve (SPR), are now at their lowest level since February 2024. Demand tends to be much lower during the winter as people drive less.

Stockpiles at Cushing, Oklahoma, fell again last week, edging closer to what analysts warn are operationally low levels. The market pays particular attention to this metric because Cushing is where West Texas Intermediate (WTI) oil futures are priced.

The good news is that due to a surge of imports along the East Coast, gasoline stockpiles increased for the first time in 16 weeks. Stockpiles of diesel and other distillates rebounded, too.

However, Matt Smith, director of commodity research at Kpler, blamed the higher stockpiles on a demand “hangover” following the Memorial Day weekend period.

Tom Kloza, an energy adviser to Gulf Oil, told CNN the recent drop in gasoline prices is likely over because demand is expected to rebound and supplies are shrinking.

Kloza expects that in the coming days the amount of oil in the SPR will decline below the Biden-era lows and that gas prices could hit fresh four-year highs later this summer.

“I still think there’s great cause for concern,” he said.