With WTI slipping into a bear market, global floating oil storage at a record high for this year, and Libya getting closer to its target of 1 million barrels of oil daily, things can hardly get any worse for oil prices. The EIA today, however, offered a tiny sliver of hope by reporting a 2.5-million-barrel draw in crude oil inventories.
A day earlier, the American Petroleum Institute's weekly inventory estimate pegged oil inventories at 2.72 million barrels less than the week before, which could have cheered up markets in other circumstances, but not this time.
WTI, which has since the start of the year lost 20 percent, now might get a short respite thanks to EIA's figures. At the time of writing, it traded at US$43.62 per barrel, with Brent crude at US$46.01 a barrel. On Tuesday, WTI settled at the lowest level since last August, at US$43.23 a barrel.
The EIA reported total crude inventories stood at 509.1 million barrels at the end of last week, with imports at 7.9 million barrels. Refinery rates averaged 17.2 million bpd, with plants operating at 94 percent of capacity. Related: Is $40 Oil On The Horizon?
Gasoline production averaged 10.2 million barrels per day last week, and inventories of the most popular fuel, despite the API yesterday reporting a build, declined by 600,000 barrels, still remaining above the upper limit of the seasonal average, however. So far, driving season has failed to live up to expectations of stockpile draws, just like OPEC's extended production cut agreement.
The active rig count in the U.S. increased last week for the 22nd week in a row, reinforcing expectations that U.S. crude oil output will continue to stave off OPEC cuts, plunging international prices deeper, but, at least according to Barclays, this is unlikely. In a note to investors, the bank said that the keep the rig count above 900, U.S. producers would have to spend 70 percent more and the costs per well would have to decline - both very unlikely.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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