On September 24, U.S. crude oil and refined product inventories moved in opposite directions.

MHMarkets noted that Oilprice, citing data from the Energy Information Administration on September 23, reported that for the week ending September 18, commercial crude oil inventories rose by 3 million barrels, while gasoline and distillate inventories fell by 1.7 million barrels and 400,000 barrels, respectively.

The same weekly report revealed supply-demand differences across different segments of the chain.

Commercial crude oil inventories reached 426.4 million barrels, about 2% above the five-year average for the same period, while distillate stocks were about 12% below the average.

MHMarkets believes that rising upstream inventories alone cannot prove that end-user supply is loose, as refining conversion, product exports, and consumption pace all affect where inventories ultimately end up.

The four-week average oil product supplied was about 20.6 million barrels per day, up only 0.5% year-on-year.

This demand proxy helps smooth out single-week disturbances, but it cannot be treated as a real-time statistic for all end-user consumption.

Crude oil inventory builds may be related to import arrivals or refinery feedstock, and more flow data is needed to determine the cause.

For example, oil product supplied is a statistical concept in the balance sheet and is not the same measure as real-time gasoline station sales, nor does the timing of data release equal the timing of demand occurrence, so the two should not be conflated.

In MHMarkets' view, going forward, crude oil inventories, refined product output, and demand proxy indicators should be compared simultaneously to observe whether product destocking occurs continuously.

Only if changes in refinery processing form a sustained correspondence with oil product inventories can the market more accurately judge where tightness lies.

A single headline about a crude oil increase is not enough to summarize the state of the entire oil supply chain.