Oil Stocks Near Decade Low Complicate Bitcoin Inflation Hopes

Onshore oil inventories fell by an estimated 113 million barrels in September, according to the International Energy Agency’s Oct. 14 report. Land-based stocks approached their lowest level since at least 2016, while a buildup at sea offset most of the decline.

Oil held on tankers increased by 103 million barrels, leaving global observed inventories down by about 10 million barrels. The figures show a sharp drop in crude stored on land despite little change in total observed supplies.

The IEA linked the rise in oil at sea partly to recovering Gulf exports. Gulf crude shipments reached 13.9 million barrels a day in September, more than 75% of prewar levels. Tanker-held oil must reach refineries or storage facilities before it can replenish land-based supplies.

The agency reported record tanker rates, which raised crude transportation costs and reduced refinery margins in Europe and Asia. Higher freight costs can add to fuel prices even when production and exports increase.

The Federal Reserve’s Oct. 14 Beige Book described higher fuel costs moving through supply chains. Businesses reported that elevated diesel prices and fuel surcharges were increasing operating costs. The information was collected on or before Oct. 5.

Consumer-facing companies reported resistance to price increases and narrower margins. Those conditions limited how much of the higher costs they could pass on to customers.

U.S. diesel prices eased slightly. The Energy Information Administration reported an average on-highway price of $6.179 a gallon on Oct. 12, down 2 cents from Oct. 5. The price was $2.514 a gallon higher than a year earlier.

For Bitcoin investors, higher energy costs remain part of the inflation outlook that can affect borrowing costs and demand for riskier assets. The Federal Reserve raised its target interest-rate range by a quarter percentage point to 3.75%-4% on Sept. 16, effective Sept. 17.

An August 2023 International Monetary Fund working paper found that Federal Reserve tightening reduced investors’ appetite for risk and weighed on a historical measure of cryptocurrency prices. The New York Fed’s Secured Overnight Financing Rate was 3.88% on Oct. 14, within a 3.87%-3.89% range across the five latest observations available on Oct. 16.