US Crude Inventories Build for Second Consecutive Week

U.S. crude oil inventories experienced an unexpected build for the second consecutive week, according to data released by the American Petroleum Institute (API). For the week ending July 24th, commercial crude stockpiles rose by 3.296 million barrels. This follows a 2.603 million barrel increase in the prior week. The persistent build comes despite recent geopolitical tensions affecting shipping lanes, notably disruptions in the Strait of Hormuz, which might typically suggest tighter supply expectations. While commercial inventories have accumulated, the Strategic Petroleum Reserve (SPR) continued to see significant drawdowns. An additional 3.7 million barrels were released from the SPR during the week ending July 24th. This ongoing intervention from the SPR has been a key factor in managing overall U.S. crude inventory levels, preventing a larger net deficit for the year. Over the last fifteen weeks, commercial crude oil inventories, excluding SPR contributions, have collectively decreased by just over 54 million barrels. However, when factoring in the consistent SPR releases, total U.S. crude inventories are down by a more modest 3 million barrels year-to-date, according to API data. The continued replenishment of commercial stocks despite ongoing geopolitical events suggests either robust domestic production, weaker-than-anticipated demand, or a combination of both offsetting potential supply disruptions.