The weekly increase marked the highest since October 2016, Bloomberg noted. Oil stockpiles have been on the rise this year as the COVID-19 outbreak has severely cut demand for the commodity. Restrictions on air travel and fewer daily commuters worldwide as the pandemic widens have contributed to curbing the need for more oil.
“The oil surplus — the amount of production in excess of demand — will soon fill storage tanks around the world,” said IHS Market in a Tuesday note ahead of the EIA’s report. “If oil cannot be sold or stored, it cannot be produced,” the financial data provider added. It projects that up to 10 million barrels per day of world oil production will be cut or shut-in from April to June. “If there is no international agreement to curtail oil production then brutal unadulterated market forces will bring the oil market into balance,” said Jim Burkhard, head of oil markets at IHS Markit.
Brent crude prices took the brunt of the selling Wednesday, falling 5.5% to trade below $25 a barrel. West Texas Intermediate oil fell about 1% to trade nearer to $20 a barrel. More than 888,000 people worldwide have been infected by the virus, and more than 44,000 have died, according to Johns Hopkins University.
The EIA also said gasoline stockpiles increased by 7.5 million barrels last week and are running about 4% above the five-year average for this time of year. A week ago, gasoline inventories were down by 1.5 million barrels. Distillates also declined, by 2.2 million barrels last week, which is roughly 13% below normal.
Crude imports fell by 70,000 barrels a day last week to an average of 6 million barrels, the agency said. Imports over the past four weeks are down 6.9% to average 6.3 million barrels.
The EIA also said gasoline production averaged 7.5 million barrels a day last week, compared with 9 million barrels the week before. Output of distillate fuel averaged 5 million barrels a day, up from 4.8 million barrels a day a week earlier. Crude refinery inputs averaged 14.9 million barrels a day.