Feb. 3 (UPI) -- The U.S. crude oil market is turning bearish as stockpiles build up in response to rising imports, a review of data from Societe Generale said.
A weekly report from the U.S. Energy Information Administration put total domestic oil production at an average 8.9 million barrels per day for the week ending Jan. 27. That's down slightly from the previous week. Imports increased slightly, commercial crude oil inventories increased by 6.5 million barrels and, at 494.8 million barrels, are at the upper range for the average this time of year.
Michael Wittner, the head of U.S. commodities research at SocGen, said in an emailed report the U.S. market was turning bearish, adding "the rise in crude stocks was entirely driven by the U.S. Gulf Coast, where imports saw a particularly large jump and refinery runs continued to fall due to maintenance."
Refineries are running lower as they prepare for regular maintenance season ahead of a U.S. market shift to a summer blend of gasoline, which requires additional environmental safeguards because of warmer weather. Data shows that imports into the U.S. market, meanwhile, moved higher after two straight weeks.
Elsewhere, at the main storage hub in Cushing, Okla., Wittner said stockpiles tightened for their fourth-straight week, though flows out of Cushing are curtailed by pipeline problems and that could show up as supply-side pressure by next week.
Storage in the U.S. Strategic Petroleum Reserve remained unchanged at 695.1 million barrels. SPR sales are permitted for early 2017, however.
In terms of production, EIA data show output was down slightly from previous weeks because of declines in the Lower 48. That means any reported growth is coming from the U.S. Gulf of Mexico or Alaska.
Anthony Starkey, the manager of energy analysis for S&P Global Platts, said in a separate report from earlier this week that most of the recent gains in U.S. oil production have yet to factor in resilient shale.
"We have yet to really see the improvement in shale output," he said.
Activity in the exploration and production sector, reported in weekly rig count data from Baker Hughes, show a steady rise in the United States. Lower crude oil prices curtailed rig activity last year, though shale has been more resilient than expected.
A level of global market balance is apparent in a managed production decline agreement coordinated by the Organization of Petroleum Exporting Countries.
