Crude oil prices fell further down today after the Energy Information Administration reported a 1.6-million-barrel build in crude oil inventories for the week to August 9.
This compares with an unexpected inventory build of 2.4 million barrels for the previous week that weighed on prices since it followed three weeks of considerable inventory draws.
Prices have already been pressured by global economic growth concerns caused by the deepening rout between the United States and China even though earlier this week prices got a respite after the White House said some of the tariffs on Chinese goods would be delayed until December this year.
The respite was bound to be only temporary and it is already over, with both West Texas Intermediate and Brent crude down at the time of writing, WTI by more than a percentage point since yesterday’s close.
The American Petroleum Institute’s surprise inventory build added its own pressure to the price slide yesterday. While expectations had been for a draw, the API reported an inventory increase of 3.7 million barrels.
EIA is most likely to also report another jump in production, which in the first week of August reached 12.3 million bpd, which will not help prices recover, either.
In fuel inventories, the EIA reported a gasoline decline of 1.4 million barrels and a distillate fuel fall of 1.9 million barrels. This compares with a 4.4-million-barrel build in gasoline inventories a week earlier and a 1.5-million-barrel build in distillate fuel inventories.
In production, the EIA said refineries processed 17.3 million barrels daily last week, churning out 10.2 million bpd of gasoline and 5.1 million bpd of distillate fuels. This compared with 10.4 million bpd in gasoline production and 5.3 million bpd in distillate fuel production a week earlier.
At the time of writing, Brent crude was trading at US$59.18 a barrel with West Texas Intermediate at US$54.92 a barrel, both down by more than 3 percent since yesterday’s close.
By Irina Slav for Oilprice.com
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It is one of the tools the EIA has used for years to manipulate oil prices. Yet, the United States has had the temerity to accuse OPEC of cartel-like practices and price manipulation.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London