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EIA Boosts Oil Prices With Huge Draw Report

Shale gas well

Crude oil inventories last week fell by 6.2 million barrels to 504.6 million barrels, the EIA reported, a day after the American Petroleum Institute estimated inventories had dropped by an unexpected 7.5 million barrels. The API report pushed oil prices up, offsetting the news of renewed Libyan oil exports from the port of Ras Lanuf and Nigeria’s plans to start ramping up its oil production.

In the week before last, oil inventories registered a 600,000-barrel draw, EIA data showed.

Expectations from analysts polled by Reuters were for an inventory build of 2.3 million barrels, while S&P Global Platts estimated stockpiles had gone up by 2.8 million barrels.

Meanwhile, however, a leak in a gasoline pipeline occurred in Alabama last week, sparking a panic in the Eastern U.S. about possible fuel shortages.

The pipeline, operated by Colonial Pipeline Co., is the main artery between the Gulf Coast refineries and the eastern states, and the largest gasoline pipeline in the country. It carries 1.3 million barrels of the fuel a day. By yesterday, the operator had completed a bypass line that allowed the resumption of deliveries.

In its latest report, the EIA said that gasoline inventories in the seven days to September 16 declined by 3.2 million barrels, after in the week before they rose by 600,000 barrels, sparking some bullish attitudes in an overall bearish environment. Still, the EIA said, both crude oil and gasoline inventories remained higher than usual for this time of year.

Related: Oil Investment Crash Could Continue For Another Year

Refineries operated at 92 percent of capacity, processing 16.6 million barrels of crude and producing 10.1 million barrels of gasoline daily, a bit more than in the previous week.

Looking forward, the EIA has announced that starting October 13, it won’t include the oil lease stocks in the U.S. in its commercial inventory weekly report, which means some 31 million barrels will be deducted from every weekly total.

At the time of writing, WTI was trading up 2.68 percent at US$45.23 per barrel, after yesterday closing up 0.32 percent at US$43.44, and Brent was up 2.2 percent at US$46.89, up from yesterday’s settlement of US$45.88.

By Irina Slav for Oilprice.com

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  • Bob on September 21 2016 said:
    These weekly inventory reports appear very strange. This latest with the 6+ million draw, compared to the prior week, seemed to show production up, imports up, and refining inputs down. Exports were up but they didn't appear to overshadow the other data that looked to hint at what would seem to be less inventory pull week-over-week.

    Yet last week a 600k draw was reported and this week a 10x increase in draw? What is going on?

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