US crude oil and refined product inventories have recently experienced substantial declines, with strategic petroleum reserves dropping to their lowest point since the early 1980s. Despite this ongoing market tightening, international oil prices have shown relatively modest gains, creating a tug-of-war between immediate physical scarcity and forward-looking market expectations.
According to estimates from the American Petroleum Institute (API), US commercial crude oil inventories fell by 9.119 million barrels in the week ending June 5th, far exceeding analysts' expectations for a 3.4 million barrel draw. Over the past eight weeks, US commercial crude stocks have cumulatively decreased by approximately 44 million barrels. Concurrently, gasoline inventories also declined by 1.191 million barrels last week.
The situation is even more critical regarding the Strategic Petroleum Reserve (SPR). As of June 5th, SPR stocks have dwindled to 349.2 million barrels, marking the lowest level since August 2023. At the current release rate of roughly 8 million barrels per week, the SPR is poised to fall below the Biden-era low of 346.8 million barrels set in July 2023, which would bring it to a level not seen since August 1983. Since the outbreak of the US-Iran conflict in late February, the SPR has seen a cumulative reduction of about 66 million barrels.
The CEO of the American Petroleum Institute (API), Mike Sommers, has issued a public warning about the inventory crunch. He noted that of the current SPR stockpile of roughly 350 million barrels, about 20% must be maintained for operational purposes, leaving an actual usable buffer of only about 70 million barrels—a level that has entered a zone of serious concern. Gasoline inventories are already 6% below the five-year seasonal average, rapidly narrowing the supply cushion ahead of the summer driving season peak.
ExxonMobil Senior Vice President Neil Chapman has warned that the US is approaching unprecedented inventory lows, suggesting that Brent crude spot prices could potentially surge to $150-$160 per barrel if stocks hit critically low levels. Chevron CEO Mike Wirth has also pointed out that the market's capacity to absorb supply-demand imbalances has been significantly weakened.
Despite the persistently tight inventory data, West Texas Intermediate (WTI) crude futures traded around $88.30 per barrel on Wednesday, with Brent crude near $91.70, showing only limited price appreciation. Analysts believe the market is still betting on the potential reopening of the Strait of Hormuz in the near term, though actual shipping restoration could take weeks or even months. As the summer demand peak approaches, the cumulative effect of ongoing inventory depletion may be felt more acutely in the coming weeks.