U.S. crude oil inventories have reached their lowest level in over two decades, driven by a surge in exports from the Gulf Coast. According to the U.S. Energy Department, commercial crude oil stockpiles fell by 8 million barrels to 434 million barrels, a 22-year low, in the week ending June 1. The Strategic Petroleum Reserve also decreased by 8 million barrels, reaching a 28-month low of 357 million barrels.
Impact on Local Refineries
Refineries in Texas and Louisiana are operating at high capacity to meet global demand, with U.S. refineries processing 16.9 million barrels of crude oil, operating at 94.7% capacity. This is above the typical seasonal average, as refineries like PBF Chalmette in Louisiana and TotalEnergies Port Arthur in Texas delay maintenance to capitalize on high prices.
Eric Smith, associate director of the Tulane Energy Institute, highlighted the challenges in transporting oil, noting that the release of oil from the Strategic Petroleum Reserve is ongoing, with only about 50 million barrels of the planned 172 million barrels released so far. Smith emphasized the logistical complexities involved in contracting vessels and securing clearances.
Global Demand and Local Effects
International buyers, particularly in Asia, are turning to U.S. producers to replace supplies stranded in the Persian Gulf. U.S. crude oil shipments increased to 5.9 million barrels per day, up from 4.4 million barrels the previous week. This demand has led to record U.S. exports of 6.0 million barrels a day as of mid-May.
Phil Flynn, a senior energy analyst, noted that while U.S. exports are helping to stabilize global markets, local fuel markets remain vulnerable to supply shocks. The Trump administration’s decision to waive Jones Act restrictions has temporarily added foreign-flagged vessels to the U.S. fleet, aiding in the movement of cargo from the Gulf Coast to other regions.
Despite the high export levels, U.S. gasoline prices have decreased, offering some relief to drivers. Prices fell from $4.48 to $4.22 per gallon over two weeks. However, gasoline inventories remain low, with only 215 million barrels held in commercial inventories, the lowest for this time of year since 2014.
Smith warned that while U.S. refineries are robust against hurricanes, the real threat during storm season is the surrounding infrastructure. Flooded roads and downed power lines could prevent refinery workers from reaching facilities, impacting operations.
Original reporting: KTBS 3 (Shreveport) — read the source article.
