On October 8, a single inventory report painted two very different pictures of supply and demand.

According to data released by the U.S. Energy Information Administration on September 30, commercial crude oil inventories rose by 900,000 barrels to 427.3 million barrels in the week ending September 25, running 2% above the five-year average for the same period, suggesting the feedstock side has not yet tightened in tandem.

On the refined products side, gasoline inventories fell by 1.7 million barrels and distillate inventories dropped by 2.3 million barrels, with the latter sitting 14% below the five-year average for the same period.

A rise in crude oil inventories cannot be taken as direct proof that end-user fuel supply is loose; the output mix at the refining stage and the actual pace of consumption must be compared side by side to identify where the pressure really lies.

Over the past four weeks, petroleum product supplied averaged 20.8 million barrels per day, up 2.1% year on year, while distillate supplied averaged 3.8 million barrels per day, up 5.2% year on year.

This demand proxy echoes the low inventory levels, but it is not a precise measure of final consumption, as transportation, exports and statistical cycles can all distort short-term changes.

If similar products show comparable moves for several consecutive weeks, the signal tends to carry greater reference value, while short-term swings require more data to verify.

The tightness along the diesel chain will be a key focus in the next round of reports.

If distillate stocks continue to draw down without a recovery in output, pressure on the fuel side may persist; if refineries lift production of the relevant products, the inventory gap could also ease.

When tracking, one should distinguish total crude volumes from specific products and avoid using the direction of a single inventory item to explain the entire oil market.