As investment banks become increasingly bullish on crude oil, the Energy Information Administration reported a 6.8-million-barrel build in U.S. crude oil inventories for the week ending January 26. The report comes a day after the American Petroleum Institute surprised markets once again with an estimated build of 3.23 million barrels.
Analysts had expected the EIA to report a draw of 1.6 million barrels, in keeping with a string of tenth consecutive weekly draws.
Gasoline stockpiles, according to the EIA, fell by 2 million barrels, from a build of 3.1 million barrels for the previous week. Gasoline production last week averaged 9.6 million barrels, versus 9.7 million bpd in the week before. Refineries processed an average 16 million bpd of crude last week, compared with 16.5 million bpd a week earlier.
With refinery maintenance season approaching, some analysts are starting to warn we will begin to see inventory builds and this could hurt prices for a while.
Meanwhile, earlier this week the EIA took the trouble to defend its weekly numbers, which some industry watchers have shunned as lacking credibility. The weekly inventory and, more importantly, production numbers—which have strong market-moving potential—are taken by extrapolation from the EIA’s Short-Term Energy Outlook, the authority explained. Related: Are Oilfield Services A Buy?
This is necessitated by the fact that although oil producers report weekly data, it is impossible to gather enough of this data to make a calculation based purely on it within the very short reporting window: producers report on Monday and the Weekly Petroleum Status Report is published Wednesday.
So the EIA uses its STEO figures, which are again forecast and not actual. While it would seem that estimating production numbers based on forecast data wouldn’t be too accurate, the EIA said that in hindsight the accuracy is very high, with the average difference between estimated and actual figures standing at 1.3 percent in absolute terms.
In other words, all those doubting how accurate the numbers that the EIA releases every Wednesday can rest assured that they are, in fact, very accurate.
By Irina Slav for Oilprice.com
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