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Oil Plunges After EIA Reports Builds Across The Board

Oil rig onshore

The EIA reported a 2.5-million-barrel increase in crude oil inventories for the week to August 19, following a draw of the same amount reported by the authority last week. Total inventories stood at 523.6 million barrels, still at record-high levels for this time of year.

Gasoline inventories, the EIA said, remained unchanged from the previous week, again remaining at an unusually high level for the season. Last week these inventories were down by 2.7 million barrels, marking the third week of declines in gasoline inventories, which caused traders to perk up in hopes that the gasoline glut was going away.

Distillate stockpiles were up 100,000 barrels, still within the average range for the season.

Refinery daily throughput totaled 16.7 million barrels of crude, which was a 186,000-barrel decline from the previous week, producing an average of 10 million barrels of gasoline, almost unchanged on the week.

EIA’s figures for the week to August 19 echoed the data released yesterday by the API, but were notably more modest. The industry body announced an estimated 4.46-million-barrel build in crude oil inventories, which ran counter to almost all forecasts of analysts. Even those polled by S&P Platts expected a much more modest increase of 200,000 barrels.

The API also said gasoline inventories were down by 2.2 million barrels and strategic inventories at the Cushing, Oklahoma hub went up by 417,000 in the seven-day period under review.

Data from the API and the EIA are often contrasting, which adds to the volatility of the market, especially amid other developments such as the coming OPEC meeting in September where a production freeze will be discussed. However unlikely an upcoming freeze, traders are still sensitive about any information on this topic.

The latest news in this respect came from Iraq, whose Prime Minister Haider Al-Abadi said the country, which is OPEC’s second-largest exporter, is unwilling to cap its crude oil output at the moment. Quite the contrary – Iraq is looking to increase its oil production, because, Al-Abadi said, “Iraq is still below what it should produce.”

At the time of writing of this article, Brent crude was down, trading at US$49.12 a barrel with WTI down to US$46.92 a barrel, reflecting the continuous pressures on international crude markets.

By Irina Slav for Oilprice.com

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