Amid depressed prices and storage space running low, the Energy Information Administration reported a crude oil inventory build of 13.8 million barrels for the week to March 27.
This compares with a build of 1.6 million barrels for the previous week, which was accompanied by declines in both gasoline and distillate fuel stockpiles.
Last week, gasoline inventories registered a build of 7.5 million barrels, with production averaging 7.5 million bpd. This compares with an inventory decline of 1.5 million barrels for the previous week, which followed another two weeks of consecutive declines to the tune of 11.2 million barrels combined.
In distillate fuels, the EIA reported an inventory decline of 2.2 million barrels, which compared with a reduction of 700,000 barrels a week earlier. In the first two weeks of March, distillate fuel inventories declined by a combined 9.3 million barrels. Production of distillate fuels averaged 5 million bpd last week, which compared with 4.8 million bpd a week earlier.
EIA’s weekly petroleum report, usually closely watched by traders and the industry, has been eclipsed these past two weeks by the spread of the coronavirus, which has crippled global oil demand and the oil price war between Saudi Arabia and Russia—or, as some see it, between Saudi Arabia and Russia, and U.S. shale—which has led to a steep drop in oil prices.
West Texas Intermediate traded at $20.26 a barrel, with Brent crude at $25.15 a barrel at the time of writing. The benchmarks could fall further if producers fail to curb production as the world’s free storage capacity is already running low in the environment of severely depressed demand—experts estimate it at about 20 million bpd at the height of the Covid-19 crisis—and abundant supply. And while Saudi Arabia seems bent on flooding the market with more oil, Texas producers are considering production cuts.
By Irina Slav for Oilprice.com
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