Crude oil prices fell today after the Energy Information Administration reported an inventory increase of 7.2 million barrels for the week to March 29.
This compared with a 2.8-million-barrel build in oil inventories in the previous week. Right now, inventories are slightly below the seasonal average, which will likely pass unnoticed among traders focusing on price swings alone.
The EIA also said gasoline inventories had shed 1.8 million barrels in the seven days to March 29, versus a decline of 2.9 million barrels in the prior week. Gasoline production, the authority said, averaged 9.8 million bpd, compared with 9.7 million barrels a week earlier.
In distillate fuels, the EIA reported an inventory decline of 2 million barrels versus a draw of 2.1 million barrels a week earlier. Production of distillate fuel averaged 4.9 million barrels daily last week, compared with 4.9 million bpd in the prior week.
Refineries processed 15.8 million bpd of crude in the week to March 29, the EIA also said.
Oil prices have been on the rise in the last few days as hedge funds and other money managers rushed to amass more bullish bets on data that U.S. shale oil production growth is slowing, brighter economic forecasts, and the possibility that OPEC will extend its production cuts into the second half of the year.
Money managers boosted their net long position in WTI by 29 million barrels and increased the net long position in Brent by 13 million barrels in the week ending March 26, according to data from commodity exchanges compiled by Reuters’ John Kemp.
As a result, banks are becoming more bullish as well. The Wall Street Journal reported the consensus on Brent crude for this year among 12 banks it had polled was US$68 a barrel, which is US$1 higher than their previous consensus during a February poll.
By Irina Slav for Oilprice.com
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The minute oil prices start to surge, an announcement about a build in crude oil inventory will follow like night follows day.
However, the global oil market has seen through such ploys. That is why oil prices will ignore such announcements and continue their surge upwards towards $80 a barrel or higher this year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London