Analysts had expected a modest build of 290,000 barrels in the period.
The authority also said gasoline inventories had gone up by 800,000 barrels in the reporting period, compared with a 3-million-barrel decline a week earlier. Distillate inventories last week fell by 2.6 million barrels, from a drop of 3.1 million barrels reported for the prior week.
Gasoline production averaged 9.9 million barrels daily last week, the EIA also said, and distillate production stood at 5 million bpd. This compares with 10.2 million bpd of gasoline and 5.1 million bpd of distillate a week earlier. Refineries processed 16.6 million bpd of crude.
The effect of EIA’s latest inventory report on oil prices would be interesting to watch; API’s figures seemed to remind market players that not all fundamentals are bullish for oil, with U.S. oil production continuing to be the main headwind for OPEC’s plans to push up prices higher. This week’s full report, out later today, are bound to reinforce this reminder—U.S. production has been growing steadily since late 2017. Related: What Is A ‘Fair’ Price For Oil?
In addition to fundamentals, there has been a shift in geopolitical sentiment after France’s president Emmanuel Macron yesterday called for a new Iran deal to avoid the imposition of U.S. sanctions against Tehran that the latter warned will lead to serious consequences, without going into detail.
Since the threat of new Iran sanctions has been one of the drivers behind the latest rally, the possibility that this threat could be neutralized is bound to reverse the mood on the market. Even so, as Bloomberg reports, WTI has gained as much as 7 percent since the start of April on the back of these geopolitical concerns and the latest round of self-praise from the OPEC camp. These were supported by a further decline in Venezuela’s crude oil production.
President Trump will announce his decision about the Iran deal on May 12.
At the time of writing, WTI traded at US$67.80 a barrel, with Brent crude at US$72.91 a barrel.
By Irina Slav for Oilprice.com
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