A week after reporting the largest oil inventory build since 2016, the EIA once again had bad news for oil bulls: inventories added 15.2 million barrels over the week to April 3, the authority said.
This compared with a build of 13.8 million barrels for the week before and analyst expectations of a build of 10.13 million barrels. A day earlier, the API estimated inventories had added 11.94 million barrels in the first week of April.
The EIA also reported gasoline inventories had increased by 10.5 million barrels and distillate fuel inventories had added 476,000 barrels. This compared with a gasoline inventory increase of 7.5 million barrels for the previous week and a distillate fuel inventory fall of 2.2 million barrels.
A day before the EIA released its weekly petroleum report, it issued its latest-Short-Term Energy Outlook, in which the authority forecast a substantial decline in fuel demand over the first half of the year with the hardest blow to come in the current quarter. The EIA said it expected gasoline consumption alone to fall by 1.7 million bpd this quarter from last, to 7.1 million bpd. During the second half of the year, however, gasoline consumption should recover to 8.9 million bpd.
Refineries processed 13.6 million bpd of crude last week, the EIA also said in its weekly report, which compared with 14.9 million bpd a week earlier as the first signs of the demand slump became visible. Gasoline production last week averaged 5.8 million bpd, with distillate fuel production at 5 million bpd. This compared with a daily average of 7.5 million bpd for gasoline and 5 million bpd for distillate fuels a week earlier.
Despite the API’s gloomy weekly update on inventories and the EIA’s report today, oil prices may continue trending higher for at least another day. OPEC and its partners in the production cuts are scheduled to meet tomorrow to decide on another, much deeper cut that will involve other producers such as Canada and Norway as well.
However, the agreement seems to hinge on the U.S. taking part in the cuts, which adds an element of uncertainty an agreement will be reached as Washington has been signaling a clear unwillingness to impose any production cuts on U.S. oil companies.
By Irina Slav for Oilprice.com
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