Oil prices began climbing shortly after the EIA published its weekly inventory report on Wednesday, which showed that crude oil inventories last week fell by 2.5 million barrels in the week to August 12, standing at 521.1 million barrels. The authority, however, added—likely to no avail to the already unsettled oil market—that inventories are still at a record-high level for this time of year. The caveat, although immediately disregarded by the market, may takes away much of the report’s potential for any longer-term stabilization of the oil market.
Gasoline stockpiles were also down, by as much as 2.7 million barrels but, like crude, too high for the season. Distillate inventories were up, however, by 1.9 million barrels, yet still slightly below the upper limit for the season, which may reinforce a sense of optimism in fuels.
Refineries processed 16.9 million bpd of crude last week, a weekly increase of 268,000 barrels per day from the previous week, operating at 93.5 percent of capacity.
Markets were again volatile today, with traders expecting not just EIA inventory data but also the minutes of a Fed meeting that could see interest rates finally increased after much hesitation.
Yesterday the American Petroleum Institute said commercial crude oil inventories had fallen by 1 million barrels, while Cushing stockpiles recorded a 680,000-barrel draw. The industry body also said that gasoline inventories were up by 2.2 million barrels in the seven days to 12 August, which was the biggest weekly jump for the last six months.
Last week’s data from the EIA had crude oil inventories at 523.6 million barrels, up by 1.1 million barrels, remaining at a record-high level for this time of year. Gasoline production stood at 10.1 million barrels per day and inventories were down by 2.8 million barrels, injecting some optimism into markets.
Crude oil price volatility continued this week, although media reports about a possible output freeze to be agreed by OPEC and Russia had a marked positive effect, coupled with news from Nigeria that militant attacks had so far cost it 900,000 bpd in output that needs to be restored. The latest news that pushed prices higher came from Libya, where the restoration of oil exports has been postponed once again as tensions between warring political fractions once again heated up.
An OPEC freeze remains unlikely for the time being, and observers seem to be generally skeptical about the outcomes from OPEC’s meeting next month in Algeria. Still, the draw in both crude oil and gasoline inventories should have a positive effect on market sentiment.
By Irina Slav for Oilprice.com
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