Oil Prices and Barrel Count Tell Different Stories Amid Geopolitical Tensions
Oil prices continued their upward trend, reaching $92.04 for Brent and $87.96 for West Texas Intermediate (WTI), as geopolitical tensions escalate in the Middle East.
Two oil tankers were struck by projectiles on Monday night, one Saudi-owned and one South Korean-owned, which led to a surge in prices.
The US Central Command denied any vessel had been hit by mines, contradicting Iran's claims. President Trump responded that the US would 'hit them hard' and there will be a response.
However, data shows that the physical crude market is not tight, with US commercial crude inventories building 21.9 million barrels in three weeks to 428.9 million, which is 1% above the five-year average for this time of year.
The build explains part of it, with net US crude imports increasing by 1.768 million barrels per day in one week and then falling by 1.754 million barrels per day the following week.
Refinery utilization ran at 97.4% of operable capacity, meaning every incremental barrel of crude is being processed rather than stored.
The gap between the price and the barrel count suggests that traders are not looking at the actual data.