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US commercial crude inventories rose for the third straight week to 423.8 million barrels in the week ending 10 October, up by 3.5 million barrels, according to data from the Energy Information Administration (EIA). Despite the build, total crude stocks remain about 4% below the five-year average, indicating that supply levels are still relatively lean by historical standards.

The build occurred even as crude imports dropped sharply by 878,000 barrels per day (bpd) to 5.5 million bpd. This decline was largely offset by higher exports, which rose by 876,000 bpd to 4.5 million bpd, and by stable domestic output, which edged up by 7,000 bpd to 13.6 million bpd. Over the past four weeks, imports have averaged 6.1 million bpd, down 2.4% from the same period last year, suggesting that the recent stock increase reflects timing effects between inflows and refinery demand rather than a broad oversupply.

Refinery activity showed clear signs of seasonal slowdown. Inputs averaged 15.1 million bpd, down by 1.2 million bpd from the prior week, bringing utilisation rates to 85.7%. The lower throughput aligns with the typical post-summer maintenance period, when refiners begin to scale back runs as demand for gasoline and jet fuel eases.

Product balances tightened further. Total motor gasoline inventories declined by 0.3 million barrels, keeping them slightly below the five-year norm, while distillate stocks fell by 4.5 million barrels to stand 7% under seasonal averages. These draws suggest product output is being deliberately curtailed to prevent oversupply in a softer demand environment. In contrast, propane/propylene inventories climbed by 1.9 million barrels, extending their surplus to 11% above the five-year average, consistent with seasonal stock building ahead of winter.

Demand indicators presented a mixed picture. Total products supplied — a proxy for consumption — averaged 20.7 million bpd over the past four weeks, down 0.7% year on year. Within that, gasoline demand fell 3.2%, while distillate demand rose 0.2%, pointing to steady but uneven downstream activity as the market transitions into autumn.

The latest EIA data indicates that the market is in a seasonal adjustment mode rather than imbalance. Crude inventories are building primarily due to slower refinery intake, while product stocks continue to draw as refiners manage output against softer consumption. The key focus in the weeks ahead will be how refineries calibrate their runs and how quickly winter fuel demand offsets the current crude build.

Written: Farid Muzaffar