The Energy Information Administration reported a huge draw in crude oil inventories of 12.6 million barrels for the week to July 6, after a build of 1.2 million bpd reported for the previous week.
Analysts had forecast a decline of 230,000 bpd in crude oil inventories, and a day earlier the American Petroleum Institute estimated inventories had declined by 6.796 million barrels, which further stoked the oil price rally that is making prices at the pump increasingly unappealing.
The EIA also said that gasoline inventories had shed 700,000 barrels in the week to July 6, after a 1.5-million-barrel decline a week earlier. Gasoline production averaged 10.7 million bpd last week, with refineries processing 17.7 million bpd of crude.
Distillate inventories were up by 4.1 million barrels, versus a 100,000-barrel build a week before. Production averaged 5.4 million bpd, compared with 5.5 million bpd in the previous week.
EIA's weekly reports since the start of the year have provided a mixed picture of inventories, but one thing is steadily growing: U.S. crude oil production.
Oil prices have been on the rise since late June when the U.S. started to pressure its allies around the world to stop buying Iranian crude completely. However, since then it has become evident that this is easier said than done, and the pressure has subsided somewhat although the State Department is still firm in its insistence that every barrel of Iranian oil sold abroad is a sanction violation on the part of the buyer.
Meanwhile, the trade spat between the U.S. and China is increasingly looking like a full-fledged hot war. After a week ago the two exchanged tariffs on goods and commodities worth US$34 billion, now the Trump administration has come up with a list of another US$200 billion worth of Chinese imports that will be slapped with a tariff of 10 percent. Beijing's response will likely come before the end of the day.
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