|Crude oil inventories (weekly change)||10.1M barrels||5.4M barrels|
|Gasoline (weekly change)||0.6M barrels||3.2M barrels|
|Distillates (weekly change)||-3.3M barrels||2.9M barrels|
Refineries are cutting back on production and are contributing to a big build in oil inventories which surged 10.1 million barrels in the January 16 week to 397.9 million barrels. Refineries operated at 85.5 percent of capacity in the week, down sharply from 91.0 percent in the prior week. The reduced refinery activity did help limit product inventories with gasoline inventories up only 0.6 million barrels and distillate inventories down 3.3 million barrels. Further declines in refinery activity are likely given very heavy readings on wholesale supplies which are up a year-on-year 8.7 percent for gasoline and up 12.5 percent for distillates. WTI oil is down nearly $1 to $46.25 in early reaction to the big headline build for oil.
The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced here or abroad. The level of inventories helps determine prices for petroleum products.
Petroleum product prices are determined by supply and demand - just like any other good and service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices - or price increases for a wide variety of petroleum products such as gasoline or heating oil. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much. During a period of sluggish economic activity, demand for crude oil may not be as strong. If inventories are rising, this may push down oil prices.
Crude oil is an important commodity in the global market. Prices fluctuate depending on supply and demand conditions in the world. Since oil is such an important part of the economy, it can also help determine the direction of inflation. In the U.S., consumer prices have moderated whenever oil prices have fallen, but have accelerated when oil prices have risen.
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