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(+)US Oil Weekly Update: Inventory Build, Activity Crash
West Texas Intermediate has gained 3% in the last five trading sessions and once again above the important break-even levels for US shale industry.
OPEC+ are scheduled to meet on Sunday July 6 to discuss the important topic of unwinding barrels from the 2023 tranche of cuts. For three consecutive months the OPEC+ countries has increased their production at an accelerated pace, three times the volumes originally planned.
Market watcher expects the group to agree on a fourth 411 000 barrels a day hike on Sunday and should OPEC+ agree on the fifth 411 000 bpd hike at the August meeting the unwinding of the 2.2 million barrels per day of voluntary cuts is close to finished.
According to EIA data the USA crude oil stocks has been declining since late May, and with continuous draws in US and global inventories the market might be healthy enough to absorb the additional barrels coming from the group of producing countries. But the last EIA report showed a bigger than expected build in inventories, with commercial inventories gaining over 3,8 million barrels.
US production fell from 13,435 million barrels to 13,433 million barrels per day in the week ending June 27. The domestic production is still above the levels 12 months ago, but with the activity level in the US in a steep decline the production will be affected at some point.
Another week of crashing activity in the US according to Baker Hughes rig count. Following the seven-rig-decline published by Baker Hughes last week, the rig count showed even more drastic data this week.
Total active rigs in the US fell from 547 to 539 last week, with oil focused rigs falling from 432 to 425 and down by 57 rigs year to date. Gas focused rigs fell from 109 to 108 last week and still up year to date.
The activity level in total is down by 50 rigs in 2025, from 589 to 539 active rigs in the US.
Figure 1. West Texas Intermediate Contracts.
Figure 2. West Texas Intermediate the Last Five Days.
US Crude inventories and production.
US commercial crude oil inventories increased by 3.8 million barrels in the week ending June 27, with market forecasters predicting between 1.5 and 2 million barrel-decrease in crude stocks. U.S. commercial crude oil inventories are about 9 percent below the five-year average for this time of year and 29.6 million barrels lower than a year ago. U.S. crude oil refinery inputs averaged 17.105 million barrels per day during the week ending June 27, 2025, 118 Kbpd higher compared to the previous week`s average. Refineries operated at 94.9 percent of their operable capacity last week. American production decreased by 2 Kbpd last week at 13,433 million barrels per day although a plateauing number the domestic production is 233 000 barrels per day higher than twelve months ago.
Figure 3. US Crude Stocks including SPR at 821.7 million Barrels.
Figure 4. US Crude Stocks Excluding SPR at 419.0 million Barrels.
US Rig Activity.
The total number of active rigs operating in the US according to Baker Hughes rig count decreased by eight last week, currently at 539. Oil focused rigs decreased by seven last week, at 425 active rigs. Gas focused rigs decreased by one last week now at 108 active rigs. Miscellaneous were flat last week still at six active rigs.
Figure 5. Active Oil Focused Rigs Decreased by Seven Last Week now at 425
Figure 6. Active Gas Focused Rigs Decreased by One Last Week now at 108
Figure 7. Total Active Rigs in the U.S. Decreased by Eight Last Week, now at 539.
Figure 8. Rig Count in Major Basins.
Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Baker Hughes Tool Company began weekly counts of U.S. and Canadian drilling activity. Baker Hughes initiated the monthly international rig count in 1975. The North American rig count is released weekly at noon Central Time on the last day of the work week.
By the Numbers July 3, 2025.
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This report is under no circumstances intended to be used for or considered as investment advice. This report is to be used as information and general market guidance. The author, GE Briefings and Investornytt cannot guarantee that the information from sources is without incentives, but the author has taken considerable care to ensure that, and to the best of his knowledge, material information contained in the report is in accordance with the facts and contains no omission likely to affect its understanding. Please note that this report is the author’s own research, opinions and conclusions, and the readers are recommended to draw their own conclusions based on other sources than this report, the facts and market picture can change in an instant and therefore the reader must do their own due diligence. The author, GE Briefings and Investornytt cannot be held responsible for the readers investments based on this report.
