After reporting two consecutive weekly crude oil inventory builds, this week the EIA continued with another build, of 1.8 million barrels for the week to February 9.
Analysts cited by IG were spot on in their predictions: they had expected the EIA to report a 1.8-million barrel build, down slightly from last week’s 1.9-million barrel increase that weighed on prices that were already on the slide. A day earlier, the American Petroleum Institute estimated a 3.947-million-barrel build in inventories, which pressured prices further.
After four gasoline inventory builds and one draw since the start of the year, for the week to February 9 the EIA reported the second build in a row, at a hefty 3.6 million barrels. Daily gasoline production averaged 9.6 million barrels, down from 10.1 million bpd a week earlier as maintenance season kicks in.
At the time of writing, Brent crude traded at US$62.33 a barrel and West Texas Intermediate was at US$58.65. Meanwhile, data from the physical oil market has suggested that the slide we are witnessing now may be only the beginning of a trend that would very likely worry OPEC, but could also trouble U.S. drillers, too.
Demand for some of the most popular crude oil grades has been weaker than expected and their prices have fallen to the lowest in several months. This is true of grades such as North Sea Forties, and Russian Urals—and in fuels, Atlantic diesel—as refineries seem to be reluctant to take advantage of lower prices and boost their profit margins.
This data goes counter to a string of optimistic global economic growth forecasts that should lead to higher crude oil demand and is making traders more cautious. The EIA itself and the International Energy Agency have added to this attitude by expecting U.S. production growth to continue, and according to the IEA, turn the U.S. into the world’s top crude oil producer and force OPEC to face its dilemma of market share versus prices again.
By Irina Slav for Oilprice.com
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