Analysis: EIA Sees USCG Stocks Beating Refinery Runs

VIENNA (DTN) – U.S. crude oil inventories are ballooning on the Gulf Coast, potentially creating a regional supply glut even as refiners aggressively process crude at high run rates, latest Energy Information Administration (EIA) data indicates.

The divergence suggests that robust domestic production and a well-supplied global market are overwhelming strong seasonal demand for crude, potentially capping the recent recovery in oil prices.

WTI’s front-month November delivery contract on NYMEX hit a four-month low of $60.40 last week, precisely on oversupply worries, though that selloff was influenced more by rising OPEC+ production.

The domestic production story is a different tale and could cap this week’s rebound in crude prices that took WTI to a one-week high of $62.92 on Wednesday (10/8).

EIA weekly data shows U.S. commercial crude stocks rising by 3.7 million barrels to 420.3 million barrels during the week ended October 3.

Crucially, the surge was heavily concentrated in the U.S. Gulf Coast (PADD 3), where stocks have jumped more than 10 million bbl in just two weeks, including a 6.2-million bbl jump last week alone.

The rapid build is highly unusual. Gulf Coast inventories typically draw down over the summer months and into fall as refiners try to meet fuel demand.

In fact, despite an uptick in refining operations, PADD 3 crude stocks have now rebounded to 244.5 million barrels, already 2% higher than the same week last year, after having troughed exceptionally early back in June.

Refinery demand remains strong, fueled by healthy margins that the EIA estimates doubled year-on-year for gasoline and diesel in the third quarter.

Over the last four weeks, net crude oil inputs averaged 16.34 million bpd, a 2% increase over 2024 despite a drop in available refining capacity. Last week’s input peaked at 16.3 million bpd, more than 700,000 bpd higher than a year ago.

However, this demand has clearly been dwarfed by supply. The massive Gulf Coast inventory build implies that booming domestic production is flooding the system.

Weekly EIA production data shows only a 250,000-bpd year-on-year rise over the last month, but a much higher positive adjustment factor hinted the agency was still underestimating production in its weekly report.

That was reflected by another report that it publishes – the Short-Term Energy Outlook – where the EIA issued an upward revision on output, pegging July production at a record 13.64 million bpd.

The ongoing stock concentration in the nation’s central oil hub underscores a growing supply imbalance that could signal a wider market softening, despite strong refinery performance.