After API’s latest surprise inventory build pressured oil prices, the Energy Information Administration cheered the market up by refuting the build and reporting instead yet another weekly draw, of 2.1 million barrels for the week to September 14.
Last week, the authority estimated crude oil inventories had fallen by another 5.3 million barrels, indicating that demand was still strong. The coming weeks, however, might see a reversal of this trend, with builds accumulating amid refinery maintenance season. For many refiners, this is the last chance to join low-sulfur fuel oil and diesel fuel producers who are set to benefit the most from the new bunkering fuel regulations to come into effect in 2020.
Until refinery maintenance kicks in, however, U.S. facilities processed 17.4 million barrels of crude daily in the week to September 14, compared with 17.9 million bpd a week earlier.
Gasoline inventories went down by 1.7 million barrels last week, compared with a build of 1.3 million barrels a week earlier. These, like distillate fuel inventories, are also expected to start building up during refinery maintenance season, but also because the winter is a weaker season in terms of fuel demand. Distillate fuel inventories last week added 800,000 barrels, from a substantial increase of 6.2 million barrels a week earlier.
As for U.S. production, the EIA earlier this week forecast in its latest Drilling Productivity Report that shale oil production will expand further next month, to 7.59 million barrels daily, or 79,000 bpd more than this month’s daily average.
Earlier this month, in its Short-Term Energy Outlook, the EIA reported preliminary production estimates suggest the United States had overtaken Russia as the world’s top crude oil producer, pumping 10.9 million bpd on average in August. Next year, the EIA estimated, daily production will hit an average of 11.5 million bpd, up from this year’s estimated 10.7 million bpd.
By Irina Slav for Oilprice.com
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