Crude Weakens Despite Tight Product Inventories
July 2, 2026
The U.S. Energy Information Administration (EIA) reported crude oil inventories declined by 3.78 million barrels last week. Gasoline inventories fell by 2.33 million barrels, while distillate stocks increased by 2.48 million barrels.
Propane inventories rose by 1.259 million barrels to 91.306 million barrels. That compares with 76.651 million barrels a year ago and a five-year average of 69.994 million barrels, leaving inventories well above historical norms.
In the Midwest, propane inventories increased by 720,000 barrels to 21.419 million barrels, compared with 18.422 million a year ago and a five-year average of 19.706 million barrels. Gulf Coast inventories climbed by 173,000 barrels to 58.833 million barrels, versus 46.929 million last year and a five-year average of 40.232 million barrels.
Total U.S. crude oil inventories now stand at 408.359 million barrels, compared with 418.951 million barrels a year ago and a three-year average of 439.891 million barrels. Crude inventories are at their lowest level since September 2018. Gasoline inventories total 213.966 million barrels, down from 232.126 million a year ago and below the three-year average of 227.751 million barrels. Distillate inventories stand at 108.599 million barrels, compared with 103.622 million a year ago and a three-year average of 112.239 million barrels.
Attention now turns to this weekend’s OPEC+ meeting, where member nations are widely expected to approve another production increase beginning in August.
Global crude markets are showing signs of oversupply as the ceasefire between the United States and Iran and the easing of sanctions have allowed more Middle Eastern oil to reach the market. The additional supply has weighed on crude prices, pushing benchmark oil below $70 per barrel. Iranian officials claim the country has sold 40 to 50 million barrels since the blockade was lifted, reportedly at a 20% premium. However, an estimated 58 million barrels of Iranian crude remain in floating storage, with more than 90% still seeking buyers.
Refined products tell a different story. While crude supplies appear ample, gasoline and distillate inventories remain relatively tight, particularly for this time of year. At the same time, reports of slowing fuel demand are becoming more common, which could help prevent inventories from tightening further and limit upward pressure on prices. Even so, the geopolitical outlook remains uncertain, and any setback in the fragile peace negotiations could quickly change the market’s direction.