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U.S. crude oil inventory data for the week just released by the American Petroleum Institute (API) shows a 1.3 million-barrel draw in line with consensus forecasts, making this a larger reduction in inventory than last week.
The draw may help marginally to support crude oil prices, which have fallen over the past week as the market turns bearish in light of fears of a worsening glut as U.S. producers pick up production.
Cushing inventory fell by 1.3 million barrels, according to the API. Genscape had estimated a small build to the contrary.
In terms of gasoline, inventory was down 0.45 million in what is good news for gas stocks, but distillates showed a 0.5 million-barrel build.
Oil prices have been highly volatile all day, but slid to US$39.50. Right before the API data was released, oil was sitting at US$39.60, but the immediate reaction to the data was for WTI to lose some ground and then recover to around US$39.80. At the time of writing, WTI was at US$39.51.
OPEC output fell by 80,000 bpd in July due to militant attacks in Nigeria and the ongoing dispute over control of Libya’s oil and exports, according to a Bloomberg News survey. The biggest decline was in Nigeria, which saw a 70,000 bpd drop for the month, to 1.52 MMbpd. Libya’s output was down an additional 20,000 bpd last month, while Saudi Arabia’s output was down 40,000 bpd. However, supply from OPEC has risen to 33.41 million bdp in July, from a revised 33.31 million bpd in June.
Last week, the API reported an 800,000-barrel draw in crude oil inventories for the week to July 22. Strategic inventories at Cushing, Oklahoma were up by 1.4 million barrels for that same week, according to the API.
Right ahead of last week’s API report, WTI had plunged to a three-month low to US$42.83 per barrel.
On Wednesday morning ET, the Energy Information Administration (EIA) will release official U.S. crude oil inventory data. Last week’s EIA report showed U.S. crude stockpiles fell by 1.7 million barrels in the week ended July 22. Markets will be keeping a keen eye on tomorrow’s EIA data, particularly because there has been a tendency of late for this data to contradict API data.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com