Crude oil prices rose higher today after the Energy Information Administration reported an inventory draw of 6.9 million barrels for the week to July 2.
This compared with a draw of 6.7 million barrels for the previous week.
Analysts had expected the EIA to report a 3.925-million-barrel draw in crude oil inventories for the week.
Whatever the EIA estimates, they are unlikely to move prices very much this week or for very long, not with OPEC+ canceling its last meeting without making a decision about future production, prompting abundant speculation that this may be the end of the cartel.
While OPEC discusses its next moves, U.S. oil producers are keeping a lid on output despite rising prices. EIA estimated average daily production for the last full week of June at 11.1 million bpd, unchanged from the previous week and only 100,000 bpd higher than a year ago, at the height of the crisis caused by the pandemic.
This week’s full report, when it comes out later today, is unlikely to reveal any major upward changes either.
Meanwhile, the authority estimated a 6.1-million-barrel draw in gasoline stocks over the week to July 2, with production averaging 10.6 million bpd. This compared with a stock build of 1.5 million barrels for the previous week, and production of 9.6 million bpd.
In middle distillates, the EIA reported an inventory increase of 1.6 million barrels, which compared with a draw of 900,000 barrels for the previous week. Production last week averaged 5 million bpd, virtually flat on the week.
The increased uncertainty around OPEC+ caused oil prices to fall today. At the time of writing, Brent crude was trading at $73.08 per barrel, with West Texas Intermediate at $71.70 per barrel, after earlier this week the news of the OPEC discord pushed benchmarks higher. That spike only lasted briefly before traders retreated to wait for what OPEC would do next.
By Irina Slav for Oilprice.com
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Soon OPEC+ will reach agreement on increasing its production. The reason is that both Saudi Arabia and UAE won’t allow the public spat between them to escalate since both of them realize that cooperation inside OPEC+ benefits oil prices and therefore their economies.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London