Amid stubbornly falling oil prices and growing doubts about OPEC’s ability to rein in production, the EIA reported a draw in U.S. commercial crude oil inventories of 6.5 million barrels for the week to August 4.
A day earlier, the American Petroleum Institute’s weekly inventory estimate propped up prices, limiting their fall, by suggesting commercial inventories fell by 7.839 million barrels. Analysts had expected a much smaller draw, of 2.272 million barrels. Gasoline inventories, however, rose by 1.53 million barrels, the API reported, versus expectations for a draw of 1.5 million barrels.
On a more troubling note, the EIA calculated gasoline inventories had gone up by 3.4 million barrels last week, with daily production averaging 10.3 million barrels, basically flat on the previous week, when refineries processed some 17.4 million barrels of crude daily. Last week, runs rose to 17.6 million barrels of oil daily.
Benchmark oil prices have been sliding since the start of the week and the slide continued after the Tuesday OPEC meeting that the most optimistic among the oil bulls expected would yield additional cuts. Instead, the meeting did what it said on the tin: a discussion of compliance rates among the parties to the production cut agreement inked at the end of last year. Related: Did BP Just Unlock A New Major Shale Gas Basin?
The cartel said in a statement after the meeting that those that were lagging behind in their compliance, namely Iraq, the UAE, and Kazakhstan, had affirmed their commitment to the deal. However, it seems that no commitments as to actually cutting production were made by any of the three.
Bloomberg reports that Kazakhstan has been steadily increasing its production since the beginning of the year, Iraq’s compliance rate fell to 29 percent last month, and the UAE’s fell to 60 percent, according to IEA data. The two OPEC members, Iraq and the UAE, were said to have complained that the secondary-source production data OPEC uses to gauge compliance was faulty.
EIA’s figure may serve to keep the glimmer of hope glowing in an already excessively volatile market. At the time of writing, WTI was trading at US$49.45 a barrel and Brent crude was at US$52.47 a barrel, both up from yesterday’s close.
By Irina Slav for Oilprice.com
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