The Energy Information Administration reported a 4.6-million draw in crude oil inventories for the week to March 30, largely in line with analysts polled by IG, who had expected a draw of 4.1 million barrels. For the previous week, the EIA had reported a 1.6-million-barrel build in crude oil inventories.
A day earlier, the American Petroleum Institute surprised traders with a crude oil inventory draw of 3.28 million barrels, versus analyst expectations of a modest build.
The effect of EIA’s report is likely to be limited this week, as yesterday a Bloomberg survey among industry analysts revealed OPEC’s production last month had fallen to a 12-month low. Though this was largely thanks to the inexorable slide in Venezuela’s oil production, figures are figures and the market is prone to take them at face value.
The positive effect of this update, however, was curbed by another piece of news: Russia reported the highest oil production in 11 months for March, slightly above its quota under the OPEC+ agreement from December 2016.
In the United States, production likely also continued to grow, after two weeks ago it hit another high of 10.433 million bpd. Though Baker Hughes last Friday reported a lower rig count, which had a positive effect on prices, the fluctuations in the rig count don’t have a lot to do with well productivity these days. As a result, the U.S. production numbers for last week, to be released later in the day, will probably be higher than the previous week’s. Related: An Oil Price Rally Is Likely
Refineries last week processed 16.9 million barrels of crude daily and produced 10.1 million barrels of gasoline and 5 million barrels of distillate daily.
Gasoline inventories fell in the reporting period by 1.1 million barrels, after a weekly draw of 3.5 million barrels in the prior week, and distillate stockpiles moved higher by 500,000 barrels.
At the time of writing, WTI traded at US$62.38 a barrel and Brent crude was at US$67.11.
By Irina Slav for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- Trade War Looms Over Oil Markets
- Oil Prices Poised To Rise As Cycle Comes To An End
- Houthi Missile Hits Saudi Oil Tanker
All the same, the global oil market has long ago discounted announcements by the EIA, the API and the IEA about a draw or build in US oil and gasoline inventories or rises in US oil production.
I keep pointing out time and time again that what is pushing prices up is the robust global demand for oil and a virtually re-balanced market.
Still, oil prices have been affected during the last few days by the potential of a trade war between China and the United States that could impact the global economy as a whole. This is the last thing the global oil market needs.
Another point is that we should not make a song and a dance about increasing Russian oil production in March this year. One has to look at the average daily production in 2017 and also in January and February 2018 to judge as to whether Russia has been adhering to its promised production cut or not.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London