Crude oil prices remained steady today after the Energy Information Administration confirmed an API estimate of a crude oil inventory draw but a much smaller one than API's 10.18 million barrels. The authority reported crude oil inventories in the United States had gone down by 1.2 million barrels in the week to December 7, the second weekly draw after a string of weekly increases, after a draw of 7.3 million barrels a week earlier.
Oil prices have proved stubborn in the last couple of weeks, moving up and down by too little for the comfort of those who would like to see them higher in light of some strong tailwinds such as OPEC's agreement to cut production and a major field outage in Libya.
Yet it seems the relentless increase in U.S. production is countering these tailwinds. Daily output is likely to have continued rising last week, but the actual numbers will become public at a later time, when the EIA processes production data from companies in the sector.
In gasoline, the EIA said inventories had gone up by 2.1 million barrels in the first week of December, with daily production at 10.5 million barrels, versus 9.7 million bpd a week earlier.
In distillate fuel, the authority reported a daily production rate of 5.5 million barrels and an inventory decline of 1.5 million barrels. A week earlier, refineries churned out 5.6 million bpd of distillate fuel. In total, refineries last week processed 17.4 million bpd of crude, down from a week earlier.
Analysts seem to be beginning to worry the supply cut announced by OPEC+ would not be enough to compensate projections for slowing demand growth as pressure increases on emerging economies.
What's more, Russia said it will reduce its production slowly and gradually, justifying the decision with challenging winter conditions, which means the reduction in global supply will not be felt as quickly as it would have otherwise, serving to relieve some of the worry. Acting fast on these concerns, Reuters reports, money managers have reduced their long positions on both Brent and WTI to three-year lows since the beginning of December.
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