Crude oil prices suffered additional pressure today after the Energy Information Administration reported a build in crude oil inventories for the week to April 19.
The authority said inventories had risen by 5.5 million barrels in the seven-day period two days after the United States announced it would be canceling the waivers it had granted eight oil importers so they could continue buying crude from Iran. Initially, prices jumped on the news sparked by worry about supply security, but later they eased down again as the supply situation globally appeared to be satisfactory.
"The market's underlying fundamentals have shifted away from a spot market that is well supplied to a market where demand is beginning to overtake supply," Reuters quoted Schork Report author Steven Schork as saying yesterday.
Meanwhile, the EIA also reported that gasoline inventories had shed 2.1 million barrels in the reporting period, with distillate fuel stockpiles 700,000 barrels lower than a week earlier. These compared with a decline of 1.2 million barrels in gasoline inventories and a 400,000-barrel reduction in distillate fuel inventories in the week prior.
Refineries last week processed an average 16.6 million bpd, producing 9.8 million bpd of gasoline and 5.1 million bpd of distillate fuel. A week earlier, the average daily throughput was 16.1 million bpd, with gasoline production at 9.9 million bpd and distillate fuel production at 4.8 million bpd.
After the initial shock from the announcement about the removal of the Iran sanction waivers, things seem to be calming down. Two banks-Barclays and Goldman Sachs-have already said the effects of the announcement on global supply would be short-lived as importers switch to other suppliers, who would quickly fill the 1-million-bpd expected supply gap.
At the time of writing, Brent crude traded at US$73.86 a barrel, with West Texas Intermediate changing hands at US$66.22 a barrel, both down from opening.
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