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US commercial crude inventories fell to their lowest level since 1984 last week, dropping 6.1 million barrels to 412.1 million barrels as government SPR releases and firm refinery demand drained stocks 7% below the five-year average.

The drawdown was not a demand shock. Washington has committed to releasing 172 million barrels from emergency reserves to cover supply lost during the Iran war, and analysts noted the Gulf Coast looks relatively well supplied as a result, with SPR volumes offsetting the thin commercial balance.

On the trade side, crude imports rose 436,000 b/d to 5.6 million b/d, though the four-week average sits 4% below year-ago levels. Exports also climbed 342,000 b/d, though imports outpaced them, pushing net imports higher. Domestic production was unchanged at 13.8 million b/d.

Gasoline stocks built 2.1 million barrels on the week but remain 5% below the five-year average, a signal that product demand is keeping pace with refinery output and providing little inventory comfort downstream.

The outlook hinges on the Strait of Hormuz. Traders expect US exports to ease and more crude to flow toward Cushing as stranded tankers resume transit following the US-Iran interim peace deal. How fast that normalisation moves will determine whether the four-decade low in commercial stocks marks a floor or a waypoint.

Written by: Farid Muzaffar