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Oil Slammed After EIA Reports Significant Crude Build

Oil tanker offloading

Crude oil inventories in the U.S. rose by 2.3 million barrels to 525.9 million barrels last week, remaining at historically high levels for this time of year, the Energy Information Administration reported.

The figure exceeded the 942,000-barrel build reported by the American Petroleum Institute yesterday, which rattled markets yet again.

Refineries last week processed an average of 16.6 million barrels daily, down by 64,000 barrels on the week. Gasoline production averaged 10 million barrels, basically flat on the week. The stockpiles of the most popular fuel went down by 700,000 barrels, still remaining considerably above the average for the season.

Gasoline prices have been climbing up over the last three weeks, according to the EIA. This, however, may very well change next week, as Labor Day marks the end of the driving season and higher demand. This year’s driving season saw the lowest gasoline prices for the last 12 years, reflecting the glut in crude and fuels.

Last week, the EIA reported a build of 2.5 million barrels in crude oil inventories, balancing out the previous week’s draw of the same size. Gasoline inventories were flat on the previous week, when they shed 2.7 million barrels, raising hopes of an end to the excess supply.

Oil prices are still on the seesaw, with market sentiment ranging from eager expectations for any data that may suggest a decline in the oversupply to skepticism. A greenback that’s been going up since Friday has not helped prop up crude prices: the dollar jumped after Fed chair Janet Yellen hinted in a speech that interest rates could be raised soon. Neither have comments from Iran that it’s on track to bump up its output to 4 million bpd by the end of the year.

At the time of writing of this article, Brent crude was trading at US$47.45 per barrel. WTI was at US$45.17 a barrel—both down over 2.5% for the day.

By Irina Slav for Oilprice.com

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