Oil inventories in the United States continue to decline as the latest weekly status report by the Energy Information Administration shows its seventh straight week of declines. This continues the narrative that I have been presenting for the past few weeks that the previously oversupplied situation in the United States may be coming to an end.  However, the nation’s oil inventories still remain considerably above the levels that they had at the same time last year and motor gasoline inventories actually showed an increase over last week’s levels showing that the nation still has considerable surplus supply. Thus, there is little reason to believe that we will see oil return to its previous levels anytime soon.

At the end of the week ended June 12, 2015, the nation’s inventories of crude oil contained a total of 467.9 million barrels of crude oil. This represents a decline of 2.7 million barrels from the 470.6 million that these same inventories contained at the end of the week ended June 5, 2015. However, as already mentioned, these inventories still contain substantially more oil than they did last year.  At the end of the week ended June 13, 2014, the nation’s commercial inventories of crude oil contained a total of 386.3 million barrels of crude oil.

For the past several weeks, we had seen consistently declining levels in America’s motor gasoline inventories. However, that changed this week. At the end of the week ended June 12, 2015, the nation’s commercial inventories of motor gasoline contained 217.8 million barrels of gasoline in aggregate compared to 217.4 million barrels at the end of the previous week. Admittedly, this relatively small increase does not tell us particularly much. However, current inventory levels remain slightly above last year’s levels. At the end of the week ended June 13, 2014, the nation’s inventories of motor gasoline contained a total of 214.3 million barrels.

This increase in gasoline inventories comes in spite of the fact that the nation’s oil refineries supplied less gasoline to the market than during the previous week. This tells us that gasoline inventories likely would have increased by a greater amount had production not declined.  At the end of the four-week period ended June 12, 2015, the nation’s oil refineries supplied an average of 9.372 million barrels of motor gasoline to the market per day.  In the previous four-week period ending June 5, 2015, the same refineries supplied an average of 9.393 million barrels of gasoline per day to the market. The current level is well above the corresponding period of last year. During the four-week period ended June 13, 2014, the nation’s oil refineries supplied an average of 9.074 million barrels of gasoline to the market each and every day.

Despite the decrease in the amount of gasoline supplied to the market, refinery utilization actually increased during the week. During the four-week period ended June 12, 2015, the nation’s refineries processed an average of 16.429 million barrels of crude oil per day compared to 16.412 million per day during the four-week period ended June 5, 2015. As has been the case for quite some time now, refinery utilization remained considerably above last year’s levels. At the end of the four-week period ended June 13, 2014, the nation’s oil refineries processed an average of 15.713 million barrels of crude oil per day.

In conclusion, in spite of the increase in motor gasoline inventories, it does appear that the nation is continuing to see the effects of the arrival of the summer driving season. This is fortuitous, as it also appears to be slowly reducing the oversupply of oil that persisted over the previous six months.