Saudi Arabia's Price Increase Could Indicate Oil Price Floor
Crude oil prices moved lower today after the U.S. Energy Information Administration reported an inventory build of 700,000 barrels for the week to December 23.
This compared with a draw of 5.9 million barrels for the previous week, which had pushed prices higher temporarily.
At 419 million barrels, U.S. inventories are about 6 percent below the average for this time of the year.
A day earlier, the American Petroleum Institute reported an estimated inventory draw of 1.3 million barrels, the second weekly drop in a row. U.S. crude inventories have grown by fewer than 10 million barrels this year, according to API data.
In fuels, the EIA reported a mixed picture.
Gasoline inventories shed 3.1 million barrels in the week to December 23, with production averaging 10.1 million barrels daily.
These figures compared with an inventory increase of 2.5 million barrels for the week before last, and a daily production rate of 9.6 million barrels.
In middle distillates, the EIA estimated an inventory increase of 300,000 barrels for the week to December 23, with production averaging 5.1 million barrels daily.
This compared with a moderate inventory draw of 200,000 barrels for the previous week and production of 5.1 million barrels daily.
Oil prices, meanwhile, have been slipping amid reports about higher Covid case counts in China. These have cast a shadow over expectations of fuel demand recovery in the world's biggest oil importer, curbing oil's upward potential.
The news that Russia will ban oil sales to buyers complying with the G7 price cap, on the other hand, had little effect on prices, largely because Moscow's response was anything but surprising and as such most likely factored in by the market.
According to analysts, the outlook for oil prices remains highly uncertain, as it is still too early to assess the effects of China's end of zero-Covid policies on oil demand given the situation with new infections.
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