US crude oil inventories plunge, diesel market remains tight

⑴ According to data from the U.S. Energy Information Administration, U.S. crude oil inventories decreased by approximately 8.6 million barrels last week, marking the largest decline since February and partially reflecting production shutdowns caused by hurricanes.⑵ Supply disruptions also led to a decrease in U.S. crude oil production by around 300 thousand barrels per day to 13.68 million barrels per day, the lowest level since May.⑶ Gasoline inventories increased by about 3.5 million barrels, while distillate inventories declined by approximately 2.5 million barrels to 102.6 million barrels, the lowest seasonal level on record.⑷ Diesel production rose to a seasonal record of 5.2 million barrels per day, with exports reaching 1.4 million barrels per day, the highest seasonal level since 2013, highlighting strong overseas demand amid continued global supply tightness.⑸ Refinery crude throughput rebounded to a new seasonal record, the four-week average implied gasoline demand dropped by about 100 thousand barrels per day, while distillate demand increased by roughly 200 thousand barrels per day.⑹ The report highlights the divergence between slowing gasoline demand and an increasingly tight diesel market, as strong domestic consumption and high exports continue to deplete already low inventories.⑺ Going forward, focus will be on the pace of production recovery after hurricane disruptions subside and the effect of low diesel inventories on refined product prices and refinery margins.