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EIA Boosts Bullish Oil Sentiment With 7.1-Million Barrel Draw

Cushing

In its first crude oil inventory report for the year, the EIA said commercial stockpiles stood at 479 million barrels, a draw of 7.1 million barrels from its last reported figures, a week ago.

Yesterday, the American Petroleum Institute, whose estimates are often in contrast with EIA’s official figures, reported a draw of 7.4 million barrels, against analyst expectations for a decline of 1.7-22 million barrels of crude. This week, however, API and EIA figures were in tune.

In its last weekly report for 2016, the EIA failed to impress, with a build of 614,000 barrels for the week to December 30.

For the last week of 2016, EIA reported an average daily refinery throughput of 16.7 million barrels of crude, with gasoline production at 9.5 million barrels, down from the previous week’s 10.5 million barrels.

Gasoline inventories in the seven days to December 30 were up by 8.3 million barrels, with demand apparently slacking off as winter sets in in large parts of the U.S.

Oil imports for last week stood at 7.2 million bpd, compared with 8.2 million bpd in the previous week, when imports registered a 304,000-bpd decline.

The start of the year has not been particularly good for oil prices, with both Brent crude and West Texas Intermediate (WTI) sliding down after hitting a multi-month high at the end of 2016.

Doubts about the compliance of OPEC and non-OPEC parties to the much-hyped production cut agreement that is supposed to rebalance oil’s fundamentals are growing. Related: 2017 – A Quiet Year For Oil?

With three OPEC members clearly intending to expand production as fast as they can – Libya, Nigeria, and Iran – and with U.S. producers eager to ramp up their production as well, to benefit from the higher prices, it’s only to be expected that the rally won’t last.

EIA’s figures, if they are impressive enough, can usually swing the market and this is what is likely to happen this week, after WTI and Brent both already benefited from API’s report. However, the price increase is expected to be subdued as a result of huge builds of gasoline and distillates stockpiles.

Brent recouped earlier losses yesterday and jumped above US$55 a barrel and WTI climbed over US$53, but how long this rally will last is questionable, even though EIA’s figures are in tune with API’s.

At the time of writing, WTI was trading at US$53.85 a barrel and Brent crude was at US$57.06 a barrel.

By Irina Slav for Oilprice.com

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