U.S. Crude Oil Stockpiles Rise For Third Straight Week

U.S. crude oil stockpiles have risen for the third consecutive week, according to data from the U.S. Energy Information Administration (EIA). The increase in stockpiles comes amid a rise in domestic production and a decrease in exports, which have contributed to the build-up in crude oil inventories. This trend has significant implications for the global oil market, as changes in U.S. inventory levels can signal shifts in supply and demand balances.



The EIA reported that U.S. crude oil stocks rose by 1.3 million barrels to 416.4 million barrels in the week ended January 31, 2025. This increase follows a 1.3 million barrel rise in the previous week and a 1.1 million barrel increase the week before that. The rise in stockpiles can be attributed to several primary factors:

1. Increased Production: U.S. crude oil production has been on the rise, with the four-week average U.S. production reaching 13.35 million barrels per day (mbpd) as of August 25, 2023. This increase in domestic production contributes to the growth in crude oil stockpiles (EIA, 2023).
2. Decreased Exports: Despite the increase in production, U.S. crude oil exports have been relatively stable, with the four-week average exports at 3.778 mbpd as of August 25, 2023. This stability in exports, coupled with the rise in production, leads to an accumulation of crude oil stockpiles (EIA, 2023).
3. Refinery Maintenance: Refinery capacity use has been relatively low, with the four-week average refinery inputs at 16.605 mbpd as of August 25, 2023. This lower refinery utilization rate, possibly due to maintenance or seasonal factors, results in less crude oil being processed, contributing to the increase in stockpiles (EIA, 2023).
4. Seasonal Factors: The increase in crude oil stockpiles may also be influenced by seasonal factors, such as lower demand for heating oil during the summer months, which can lead to a decrease in crude oil consumption and an increase in stockpiles.

These factors contribute to the supply-demand dynamics in the global oil market by:

* Increasing the available supply of crude oil, which can put downward pressure on prices.
* Altering the regional distribution of crude oil, as changes in U.S. exports and stockpiles can impact global trade flows.
* Influencing the global inventory levels, which can affect the overall market balance between supply and demand.

Geopolitical tensions and geopolitical risk indices, such as the Political Relationship Index (PRI) and the Geopolitical Risk Index (GPR), can also impact crude oil prices and stockpile levels. Improved US-China relationships, as indicated by a higher PRI, can drive up the price of oil, while higher geopolitical risks, as measured by the GPR, can also increase oil prices due to fears of supply disruption and uncertainty about the availability of oil. For example, during the Trump administration, the tense relationship between the US and China led to a decline in Chinese production, which in turn decreased oil demand and caused significant volatility in crude oil prices (Cai et al., 2022).



In the near future, geopolitical tensions and risks could impact U.S. crude oil inventories by influencing supply and demand dynamics. If geopolitical risks increase, the U.S. may choose to stockpile more oil to ensure energy security, leading to higher inventory levels. Conversely, if geopolitical tensions ease and political relationships improve, the U.S. may reduce its stockpiles, as it becomes more confident in its ability to access oil supplies without disruptions. Additionally, changes in U.S. crude oil production, driven by factors such as shale oil production and other macroeconomic changes, can also impact inventory levels.

In conclusion, the recent increase in U.S. crude oil stockpiles, driven by changes in domestic production, exports, and refinery utilization, has significant implications for the global oil market. Geopolitical tensions and risk indices can also impact crude oil prices and stockpile levels, influencing supply and demand dynamics. By understanding these factors, policymakers can make informed decisions about energy policies and inventory management strategies to mitigate risks and ensure energy security.