As crude oil entered its third day of price declines in a row, the Energy Information Administration added to already existing pressure by reporting a build in crude oil inventories of 2.9 million barrels for the week to October 4.
That comes after three weeks of inventory increases, with the latest, for the last week of September, at 3.1 million barrels.
The authority also reported gasoline inventories had shed 1.2 million barrels last week, versus a 200,000-barrel draw in these a week earlier. In distillate fuels, the EIA reported a decline of 3.9 million barrels, after a week earlier it estimated these had gone down by 2.4 million barrels.
Refineries processed an average 15.7 million bpd of crude last week, producing 10.1 million bpd of gasoline and 4.8 million bpd of distillate fuels. Gasoline production was slightly down while distillate fuel output was moderately higher than in the previous week.
A day before its regular weekly petroleum status report, the EIA also released its latest Short-Term Energy Outlook, which had more bad news for the oil industry. In it, the EIA revised further down its average West Texas Intermediate price to $57 a barrel from $62 a barrel by the second quarter of 2020.
The ultimate reason for this gloomy forecast seems to be the uncertainty surrounding oil demand rather than the danger of supply disruptions. As the EIA noted in its report, the danger of supply disruptions was more than offset by "increasing uncertainty about economic and oil demand growth in the coming quarters."
Of course, the biggest factor fuelling this uncertainty is the U.S.-Chinese trade war, which last month led to the addition of U.S. oil to China's tariff list. The end of this week will see another round of negotiations in Washington but nobody seems to have particularly high hopes after previous rounds began optimistically only to yield nothing but further pressure between the two countries.
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