As international prices inched up in the aftermath of Washington’s latest sanctions against Venezuela, the Energy Information Administration reported a build in crude oil inventories for the week to January 25. At 900,000 barrels, the build is modest, and follows an increase of 8 million barrels in the previous week.
Gasoline inventories reversed four weeks of builds. In the week to January 24, these shed 2.2 million barrels. In the previous four weeks, cumulative gains in gasoline reached 26.6 million barrels.
There has been growing worry that United States refiners are producing excessive amounts of gasoline, which has pressured their profit margins as the oversupply combines with sluggish demand. Last week, refineries churned out 9.9 million barrels daily of gasoline, compared with 9.6 million bpd a week earlier.
In distillate fuels, the EIA reported a 1.1-million-barrels inventory decline and average daily production of 5 million barrels, versus 5.2 million bpd a week earlier.
Meanwhile, events in Venezuela are firmly in the spotlight. Earlier this week, the U.S. announced new sanctions on the state oil company, PDVSA, with Treasury Secretary Steven Mnuchin noting the company could avoid repercussions if it recognized opposition leader Juan Guaido as the legitimate—albeit interim—president of the country. Related: Oil Prices Rise As Saudis Pledge Deeper Cuts
At the same time Guaido said he would be announcing new boards of directors for both PDVSA and its U.S. unit, Citgo, further increasing a sense of confusion already overwhelming Venezuela. The Maduro government responded with a freeze of his bank accounts and a travel ban, following which U.S. national security adviser John Bolton threatened “serious consequences” if anything happened to Guaido, whom Washington, along with Canada and a number of South American governments embraced as the legitimate president of Venezuela.
Although price reactions to the deteriorating situation have been limited, they have been positive. However, from the perspective of drivers, the news about higher oil prices is not so good, and neither is it good for refiners, as demand for gasoline remains slow in growing.
By Irina Slav for Oilprice.com
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