Crude oil prices inched higher after the Energy Information Administration today reported a draw in U.S. crude oil inventories of 4 million barrels for the week to May 3.
This compared to a hefty 9.9-million-barrel inventory build last week, which pressured prices substantially, adding to already significant pressure from rising production in the U.S. and elsewhere that countered concern about lost Iranian supply.
In gasoline inventories, the EIA reported an estimated fall of 600,000 barrels for last week, after a 900,000-barrel increase two weeks ago. Production in the week to May 3 averaged 10.1 million bpd, versus 9.9 million bpd in the previous week.
In distillate fuel, the EIA estimated an inventory draw of 200,000 barrels, which compared with a decline of 1.3 million barrels a week earlier. Distillate fuel production last week averaged 5.1 million bpd, largely unchanged on the prior week.
Refinery processing rates averaged 16.4 million bpd last week, unchanged from a week earlier. Refineries in the U.S. are gearing up for an unusually intensive maintenance season this spring, to prepare their equipment for the upcoming IMO 2020 emission rules that will suspend the production of high-sulfur fuels in favour of low-sulfur ones.
Crude oil has been trending lower in the last few days after the initial shock from the removal of U.S. sanction waivers granted to eight Iran oil importers. The market absorbed the shock pretty quickly, mainly on Saudi Arabia’s stated readiness to step in and fill the gap, and the steady rise in production in the United States. Rising crude oil inventories in the U.S. also helped: this week is the first with a draw after two consecutive weekly builds, both considerable.
At the time of writing Brent was trading at US$69.47 a barrel, with West Texas Intermediate at US$60.74 a barrel, both down by more than 2 percent since opening.
By Irina Slav for Oilprice.com
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