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Oil Markets React Stoically To Crude Inventory Draw

Oil storage tanks

Amid rising optimism about where oil prices are going, the EIA reported a 1-million-barrel draw in crude oil inventories for the week to April 14, just a day after the American Petroleum Institute estimated commercial oil inventories had fallen by a modest 840,000 bpd but gasoline inventories had gone up surprisingly by 1.37 million barrels.

EIA’s report largely confirmed API’s estimate, saying gasoline inventories were up by 1.5 million barrels last week. Analysts had expected the most popular fuel’s stockpiles to have declined by 2.2 million barrels.

At 532.3 million barrels, crude oil inventories, the EIA said, were near the upper limit of what is typical for the season, despite refineries returning to higher runs after maintenance season. It was this maintenance that, according to RBC analysts led by Helima Croft, led to the massive build in inventories over the last few months.

In the week to April 7, for example, refinery runs averaged 91 percent, with throughput rising by 268,000 bpd from the previous week to a respectable 16.7 million barrels per day. Crude inventories fell by 2.2 million barrels. At the same time, gasoline inventories were down by 3 million barrels. Related: Wall Street Is Pouring Money Back Into Shale

Last week, refinery runs averaged 16.9 million barrels of crude, up by 241,000 bpd on the week, producing 9.8 million barrels per day of gasoline and 5.2 million barrels per day of distillate, versus 9.9 million barrels of gasoline and 5.1 million barrels of distillate in the week to April 7.

Meanwhile, investment banks are spreading optimism for oil prices, encouraged by the prospect of OPEC agreeing to an extension of its six-month production cut agreement. After Goldman Sachs said that it expected the oil market to return to balance soon and remain in balance for the observable future in the absence of unexpected events, Citigroup joined in, saying it expected Brent crude to reach $65 a barrel before the year’s end, with WTI averaging $62 in the fourth quarter.

By Irina Slav for Oilprice.com

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