This week’s oil price action…
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The Energy Information Agency repored that U.S. commercial crude oil inventories declined by 2.2 million barrels in the week to July 1, standing at 524.4 million barrels. The American Petroleum Institute yesterday reported that according to its calculations commercial inventories had dropped by 6.7 million barrels.
While the API figures sent WTI higher, the official data compiled by the EIA immediately weighed on the U.S. benchmark. WTI was trading at US$46.82 a barrel within an hour of the release of EIA’s report.
The EIA remarked that the current level of commercial stockpiles is record-high for this time of year, when driving season is in full swing. Related to this, gasoline inventories were down by a meager 100,000 barrels, with the total remaining also above average for the time of year, and considerably. Gasoline production, on the other hand, went up by 10 million barrels daily.
Refineries in the U.S., operating at 92.5 percent of capacity, processed 16.7 million bpd last week, which was 8,000 barrels lower than the week before, on average.
In production, preliminary figures revealed a 194,000-barrel draw in the week to July 1.
The continuing record-high levels of crude and fuel stockpiles are worrying analysts, especially coupled with data about the addition of more active rigs across the shale play. As many as 11 oil rigs were added to the total in the week to July 1, Baker Hughes reported, indicating a returning confidence among shale oil producers, encouraged by the rally in oil prices. The sustainability of this rally is questionable, however, as international prices took a sharp plunge after Brexit on renewed worry about the state of the global economy.
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.