U.S. Crude Oil Stockpiles Extend Decline to Seven Weeks Amid Mixed Market Trends

The U.S. crude oil market continues to signal a tightening trend as inventories dropped for the seventh consecutive week, according to data from the Energy Information Administration (EIA). For the week ending January 3, commercial crude oil stocks, excluding the Strategic Petroleum Reserve (SPR), fell by 959,000 barrels, bringing total stockpiles to 414.6 million barrels. This represents a 6% decline compared to the five-year average for this period, underscoring continued strength in refining activity and seasonal adjustments in the oil market.

However, this consistent drawdown in crude inventories has been accompanied by notable builds in gasoline and distillate stocks. Gasoline inventories surged by 6.3 million barrels, while distillates rose by 6.1 million barrels, both significantly exceeding market expectations. These increases reflect the strong pace of refining activity, with refinery utilization climbing to 93.3%, up from 92.7% the previous week. According to Matt Smith, head U.S. analyst at Kpler, “Given the strong pace of refining activity, it is no surprise to see large builds to the products” (Saefong & Watts 2025).

Despite the inventory drawdown, U.S. oil production saw a marginal decline of 10,000 barrels per day, settling at 13.56 million barrels per day. Meanwhile, crude stocks at Cushing, Oklahoma, a critical delivery hub, dropped by 2.5 million barrels to 20 million barrels, marking their lowest level in a decade. This dip aligns with broader trends in domestic crude oil logistics and export dynamics. While crude imports fell by 497,000 barrels per day, exports also declined sharply by 776,000 barrels per day, resulting in a tempered draw in overall crude inventories (Harrup 2025).

Market reactions to these developments were mixed. West Texas Intermediate (WTI) crude futures for February delivery closed at $73.32 per barrel, down nearly 1.3% after fluctuating between gains and losses during the trading session. Similarly, Brent crude for March delivery dropped 1.2%, settling at $76.16 per barrel. The decline in crude prices suggests a market grappling with countervailing forces, persistent inventory draws on one hand and concerns about global economic conditions on the other. Analysts have pointed to factors such as China’s evolving economic strategies, OPEC’s production policies, and a global shift toward renewable energy as key influences on oil price volatility (Saefong & Watts 2025).

Looking ahead, industry experts anticipate a shift in market dynamics as refineries enter maintenance season, potentially reversing the trend of crude inventory drawdowns. “A ramp-up in refinery maintenance in the coming weeks should...usher in a return to crude inventory builds,” noted Smith in his analysis (Saefong & Watts 2025). However, the focus will remain on product stock levels and geopolitical developments, which could reshape supply and demand balances in the near term.

The continued decline in U.S. crude oil stockpiles highlights a market in transition, with strong refining activity driving product stock builds. While this reflects robust demand for refined fuels, broader market uncertainties—ranging from geopolitical tensions to macroeconomic pressures—suggest that the crude oil outlook remains uncertain.

Sources

Harrup, Anthony. “U.S. Crude Oil Stockpiles Extend Decline to Seven Weeks.” The Wall Street Journal, 8 Jan. 2025, 11:02 a.m., www.wsj.com/business/energy-oil/u-s-crude-oil-stockpiles-extend-decline-to-seven-weeks-8ca0707f.

Saefong, Myra P., and William Watts. “Oil Prices Tick Up After Industry Data Shows Fall in U.S. Crude Inventories.” MarketWatch, 8 Jan. 2025, updated at 3:22 p.m. ET, www.marketwatch.com/story/oil-prices-tick-up-after-industry-data-shows-fall-in-u-s-crude-inventories-dc7c647b.