The Energy Information Administration reported a draw of 600,000 barrels in U.S. crude oil inventories for the week ending October 21, bringing a shred of calm to the market worries sparked by the American Petroleum Institute’s estimate of a 4.8-million-barrel inventory increase reported yesterday.
Total crude inventories, according to EIA, stood at 468.2 million barrels, below the maximum for this time of year, but near the upper limit.
Gasoline inventories – also watched closely by traders – went down by 2 million barrels last week.
Refineries processed 15.6 million bpd of crude oil, up by 182,000 barrels on the previous week, producing 9.8 million barrels of gasoline daily, and 4.5 million tones of distillate fuel.
Last Wednesday, the EIA reported a decline in crude oil inventories of 5.2 million barrels, adding to the existing optimism amid ongoing negotiations among OPEC members of a production freeze. However, since then, the outlook on a freeze agreement has grown increasingly uncertain and this latest report is unlikely to remove all volatility, and may result in just a short spike in prices.
A series of meetings between the Russian and Saudi oil ministers, along with visits by Venezuela’s president and energy minister to Iran and Russia, have resulted in nothing specific, to say the least, with Russia’s Alexander Novak reiterating the country’s general readiness to join a freeze if all OPEC agrees, Iran’s Supreme Leader vowing to not let the cartel interfere with the country’s production raise plans, and Saudi Arabia’s push for a final agreement.
In this environment of major volatility, any information containing specific figures about demand and supply is bound to have some market-swinging effect. However, this effect may very well prove to be short-lived, unless more news comes in fundamentals-wise.
Yesterday, after API’s report, WTI dropped back below US$50 a barrel, trading at US$49.30 when Oilprice reported on API’s figures, and incurring a hefty 2.41-percent drop since the start of the trading session. Brent suffered a 2.27-percent fall to US$50.29.
At the time of writing, WTI was at US$49.75 a barrel, down a further .42 percent from opening, and Brent was trading at US$50.39, down .79 percent from open.
By Irina Slav for Oilprice.com
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