The American Petroleum Institute reported an 800,000-barrel draw in crude oil inventories for the week to July 22. Strategic inventories at Cushing, Oklahoma, however, were up by 1.4 million barrels. WTI plunged to a three-month low today, before the release of the API figures, to US$42.83 a barrel. Brent crude was trading at US$44.78 at 4.30pm EDT.
Analysts expected gasoline inventories to have gone up by 675,000 barrels in the reporting period and distillate fuel stockpiles to have gained 700,000 barrels.
However, a 420,000 barrel draw was reported for gasoline stocks and a 290,000 barrel build in distillates for the week ending July 22.
During the week to July 15, gasoline, according to the API, showed a larger build than had been anticipated, with 800,000 barrels in increased inventories instead of a 500,000-barrel drop. This rattled markets, especially after the buildup was, again, confirmed by the EIA weekly inventory report. Expectations were for a half-a-million-barrel draw in gasoline stockpiles but instead they went up by as much as 911,000 barrels in the reporting period.
There’s been growing worry about the state of oil and fuels fundamentals in the U.S. over the last few weeks as despite the fact that driving season is in full bloom, demand for gasoline has not risen as much as expected.
Earlier this week, Bloomberg warned that the drop in demand for oil and products could still outpace the decline in production, weighing heavily on crude oil prices. As soon as next month gasoline demand is expected to start slowing down as driving season draws to a close and refineries, which as of July 15 were operating at 92.3 percent of capacity, may have to start shutting down for seasonal maintenance earlier, if inventories continue to build up.
As of the writing of this, WTI was trading at US$42.76 a barrel and Brent crude was at US$44.58.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.