(+) US Oil Weekly Update: 8.7 million Barrels Increase in Crude Inventories

This week’s major focus has been on President Trumps proposed tariffs on the US neighbouring countries Mexico and Canada as well as its competitor in the east, China. The 25% tariffs on Mexican and Canadian goods were paused for 30 days after both countries agreed to increase boarder security, as were the proposed 10% tariffs on Canadian energy. US President Donald Trump imposed 10% tariffs on Chinese imports, and the Chinese government responded immediately with economic measures against the US. Chinas Ministry of Finance announced a 15% tac on coal and LNG, and 10% on crude oil agricultural machinery taking effect on February 10.

Trump also threaten tariffs on EU goods, and this could happen soon, but told reporters a deal with UK could be worked out.

President Trump also seems to tightening the screws on Iran over Tehran’s nuclear program. The news of a hawkish administration against Iran sent crude benchmark prices up by $2. Iran`s oil trade moves in the shadows and Iran`s oil industry knows how to by-pass sanctions to get oil in the market, with China as their biggest costumer. In 2024 Iran exported between 1.5 to 1.7 million bpd.

[caption id="attachment_152287" align="aligncenter" width="421"] WTI Future Contracts: WTI Contracts in Backwardation[/caption] Figure 1: WTI Weighed Down by Inventory numbers [caption id="attachment_152288" align="aligncenter" width="1024"] Investornytt/GE Briefings. Chart West Texas Intermediate[/caption] US Crude inventories and production US commercial crude oil inventories increased by 8.7 million barrels in the week ending January 31, with market forecasters predicting 2.6 million barrels increase in crude stocks. U.S. commercial crude oil inventories are about 5 percent below the five-year average for this time of year and 3.6 million barrels lower than a year ago. U.S. crude oil refinery inputs averaged 15.3 million barrels per day during the week ending January 31, 2025, which was 159 Kbpd higher than the previous week`s average. Refineries operated at 84.5 percent of their operable capacity last week.

Figure 2: US Crude Stocks including SPR at 818.9 million Barrels [caption id="attachment_152292" align="aligncenter" width="1024"] Source: U.S Energy Information Administration[/caption] Figure 3: US Crude Stocks Excluding SPR at 423.8 million Barrels [caption id="attachment_152294" align="aligncenter" width="1024"] Source: U.S Energy Information Administration[/caption] US Rig Activity The total number of active rigs operating in the US according to Baker Hughes rig count increased by six rigs last week, currently at 582. Oil focused rigs increased last week, from 472 to 479 active rigs. Gas focused rigs decreased by one, now at 98 active rigs. Miscellaneous rigs are flat for the week at five active rigs.

The Permian Basin in Texas had the biggest increase of active rigs and back above 300 active rigs at 303.

Figure 4: Active Oil Focused Rigs Increased From 472 to 479 [caption id="attachment_152293" align="aligncenter" width="1024"] Source: Baker Hughes[/caption] Figure 5: Gas Focused Rigs Decreased from 99 to 98 Active Rigs [caption id="attachment_152291" align="aligncenter" width="1024"] Source: Baker Hughes[/caption] Figure 6: Total Active Rigs in the U.S. Increased by Six Last Week, now at 582 [caption id="attachment_152289" align="aligncenter" width="1024"] Source: Baker Hughes[/caption] Figure 7: Rig Count in Major Basins [caption id="attachment_152290" align="aligncenter" width="1024"] Source: Baker Hughes[/caption] Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Baker Hughes Tool Company began weekly counts of U.S. and Canadian drilling activity. Baker Hughes initiated the monthly international rig count in 1975. The North American rig count is released weekly at noon Central Time on the last day of the work week.

By the Numbers February 5, 2025

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