Amid a new oil price rout sparked by the breakdown of the OPEC+ alliance the Energy Information Administration reported a crude oil inventory build of 7.7 million barrels for the week to March 6.
This compares with a moderate build of 800,000 barrels for the previous week. However, the EIA also reported a sizeable gasoline and distillate fuel draws for the week to February 28. For the week to March 6, fuel inventories registered hefty inventory draws.
In gasoline, the EIA reported an inventory decline of 5 million barrels for the first week of March, versus a decline of 4.3 million barrels for the previous week.
In distillate fuels, the EIA reported an inventory fall of 6.4 million barrels for the week to March 6, versus a fall of 4 million barrels for the week before.
Refineries last week processed 15.7 million bpd, producing 10 million bpd of gasoline and 4.7 million bpd of distillate fuel. This compares with 9.8 million bpd of gasoline production the previous week, and 4.6 million bpd in distillate fuel production.
Meanwhile, oil prices have recouped some of their losses but nowhere near enough to settle the jittery oil market after the oil partnership between Russia and Saudi Arabia broke down last Friday with both now set on increasing production, in Saudi Arabia’s case to more than its production capacity. Related: Junk Status? Oil Nations Face Serious Credit Downgrades
And yet, despite the break-up of the OPEC+ production cut agreement, “the doors aren’t closed” to future cooperation between Russia and OPEC, Russia’s Energy Minister Alexander Novak told local news channel Rossiya 24 on Tuesday.
“The fact that the agreement was not extended beyond April 1 doesn’t mean that we cannot cooperate with OPEC and non-OPEC producers in the future. We signed a charter last year and we will continue cooperation as part of it,” Novak said.
This means not all is lost in oil production control but before things get better they may well get worse, with independent U.S. shale producers bearing the brunt of the price row because of their high debt levels and rising breakeven prices. This, however, means U.S. production growth may slow down, which would be positive for prices regardless of how the price war develops.
By Irina Slav for Oilprice.com
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