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US commercial crude oil inventories rose by 2.5 million barrels in the week ending July 31 to 407.0 million barrels, breaking a multi-week decline as refiners trimmed processing rates and crude imports rebounded sharply. The inventory build pulled commercial stocks to approximately 6% below the five-year seasonal average. Refining activity eased modestly from recent peaks, with crude inputs dropping by 183,000 bpd to 17.2 million bpd, lowering operable capacity utilization by 0.7 percentage points to 96.5%.

On the trade balance, crude imports surged by 515,000 bpd to average 6.2 million bpd, overwhelming a lighter 218,000 bpd increase in exports, which reached 3.7 million bpd. Domestic crude production held virtually flat at 13.8 million bpd. Concurrently, Strategic Petroleum Reserve (SPR) stocks contracted by another 2.9 million barrels to 304.8 million barrels as government drawdowns persisted.

Downstream product balances tightened across the barrel despite the crude accumulation. Total motor gasoline inventories fell by 1.6 million barrels to 209.7 million barrels—7% below the five-year average—as production slowed to 9.6 million bpd. Distillate fuel oil inventories registered a heavy 3.5-million-barrel draw to 107.2 million barrels, widening the deficit to 12% below historical baselines despite refinery output holding steady at 5.2 million bpd. Meanwhile, propane/propylene stocks added 0.8 million barrels to reach 103.1 million barrels, standing 32% above seasonal baselines.

The crude build offers a brief respite for domestic supply, but aggressive draws across gasoline and distillates reflect tight downstream fundamentals. As ongoing geopolitical friction in the Middle East continues to complicate global transit routes, depleted product buffers leave physical markets highly exposed to secondary supply dislocations.

Written by: Aiman Haikal