After three straight weeks of builds in commercial oil inventories, today, the EIA had some more bad news for traders. The authority reported a build of 600,000 barrels, a day after the American Petroleum Institute estimated commercial inventories were down by 884,000 barrels in the week to February 17.
Analysts expected an increase of 3.3 million barrels for the period.
Last week, EIA’s report put crude stockpiles at a record high of 518.1 million barrels. This week’s figures were for a total inventory size of 518.7 million barrels, still above seasonal limits.
Refineries operated at 84.3 percent of capacity in the seven days to February 17, processing 15.3 million barrels of crude daily, slightly down from the 15.5 million bpd in the previous week. Gasoline output averaged 9.4 million barrels, an increase on the previous week’s 9 million bpd. Gasoline inventories went down by 2.6 million barrels in the period, offsetting some of the general inventory gloom.
Imports averaged 7.3 million barrels daily.
EIA’s figures are considered by some observers to be increasingly irrelevant as they don’t truly reflect the full supply/demand picture. Yet, they are still watched closely by investors and other market participants, as is the news coming from OPEC.
The latest from that direction is deepening pessimism: officials from the group have suggested, somewhat tentatively, that the six-month production cut may need to be extended beyond the June 30 deadline. This suggests the global glut was even deeper than they expected, which is certainly a cause for worry, turning hopes for $60 oil into a mirage.
An extension of the cuts would certainly help shrink the glut, but the longer the deal wears on, the more likely members are going to be tempted to cheat. On top of that, U.S. output is rising quicker than expected, and countries like Libya and Nigeria are undermining the effectiveness of the deal by building production.
By Irina Slav for Oilprice.com
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