Crude oil prices fell further today after the Energy Information Administration reported a crude oil inventory build of 4.9 million barrels for the week to July 17.
The EIA said that at 536.6 million barrels, inventories were 19 percent above the seasonal average as demand for fuels remains subdued.
Yesterday, the American Petroleum Institute reported an inventory increase of 7.544 million barrels, dampening any nascent optimism about U.S. oil demand. As has now become usual, the inventory build surprised markets in an unpleasant way, weighing on oil prices.
Analysts had expected the EIA to report a 1.95-million-barrel inventory decline for last week.
The authority also reported a 1.8-million-barrel decline in gasoline stockpiles and an average of 9.1 million bpd in gasoline production for last week. This suggests demand for the fuel is indeed improving, despite the improvement being an uneven one.
A week earlier, the EIA estimated a 3.1-million-barrel decline in gasoline inventories and average production of 9.1 million bpd.
In distillate fuels, the EIA reported a 1.1-million-barrel inventory build, compared with a modest decline of 453,000 bpd a week earlier. Distillate fuel production averaged 4.8 million bpd last week, compared with 4.9 million bpd a week earlier.
In the past few weeks, the EIA’s inventory report has lost some of its influence over prices as fears of an uncontained spread of the coronavirus have strengthened on record-high numbers of new cases in several states. These fears appear to outweigh any positive messages the EIA or the API might have for the oil market.
There are already signs the spread of the infection has all but cancelled the demand boost from driving season this year: while many expected a pickup in demand for fuels spurred by the pandemic as people chose their cars over airplanes, this has failed to materialize.
At the time of writing, Brent crude was trading at $43.89 a barrel with West Texas Intermediate at $41.49 a barrel, both down since opening.
By Irina Slav for Oilprice.com
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