Large Crude Build Sends Oil Prices Tumbling

Crude oil prices eased from their earlier gains after the Energy Information Administration reported inventories had added 8.8 million barrels for the week to September 2.

This compared with an inventory draw of 3.3 million barrels estimated for the previous week.

In gasoline, the EIA reported an inventory increase of 0.4 million barrels for the week to September 2, which compared with a draw of 1.2 million barrels for the previous week.

Gasoline production averaged 9.9 million barrels daily last week, compared with 9.8 million bpd a week earlier.

In middle distillates, the EIA estimated an inventory build of 0.1 million barrels for the week to September 2. This compared with a meager increase of 100,000 barrels for the previous week.

Middle distillate production picked up last week, averaging 5.0 million bpd. This compared with average daily production of 4.9 million barrels for the previous week.

U.S. refineries processed 15.9 million bpd on average last week, which compared with 16.2 million bpd during the previous week. Refineries continued operating at elevated capacity rates, with last week's at 90.9 percent, compared with 92.7 percent a week earlier.

Oil prices have been on the rebound today, after on Wednesday Russia's President, Vladimir Putin, said Russia will suspend all energy exports if the West goes ahead with price caps. The EC proposed a Russian gas price cap hours later.

The exchange prompted doubts about the security of not just gas but also oil supply, pushing Brent crude and West Texas Intermediate both higher.

Meanwhile, in the UK, the new Prime Minister, Liz Truss, is scrapping the fracking ban passed years ago, and issuing more oil and gas licenses for the North Sea in response to soaring energy prices. In Europe, Brussels continues struggling to find a quick fix for its energy price woes.

The Financial Times earlier today reported that India and China have largely offset the decline in Russian oil exports to Europe this year, taking advantage of the discount, at which Russian oil sells after the Ukraine invasion.

By Irina Slav for Oilprice.com

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