A day after API reported a rather shocking crude oil and gasoline inventory build, the Energy Information Administration (EIA) confirmed a small inventory build for crude oil of 100,000 barrels in inventory, but a decrease in inventory of 900,000 barrels of gasoline.
The crude oil build, while more optimistic than API’s figures, is contrary to analyst expectations that this week would see between a 2.3-million-barrel and 3.25-million-barrel draw for the week ending June 23.
Last week we said things could hardly get worse for oil prices, but prices have fallen even further, and while WTI is trading a bit above last week’s levels, and while many thought that today's crude build might sent prices even lower, the market reacted positvely on the gasoline draw this week.
Yesterday, the American Petroleum Institute’s weekly inventory estimate pegged oil inventories at 851,000 barrels more than the week before, shocking the market, which expected a draw. API also reported a hefty build in gasoline inventories of 1.351 million barrels, which EIA figures sharply contradict.
The EIA reported total crude inventories stood at 509.2 million barrels at the end of last week, with imports over 8.0 million barrels. Refinery rates averaged 16.9 million bpd, with plants operating at 92.5 percent of capacity. Related: Have Hedge Funds Set Oil Markets Up For A Rebound?
Gasoline production averaged 10.3 million barrels per day last week, and inventories of the most popular fuel, despite the API yesterday reporting a build, declined by 900,000 barrels, still remaining above the upper limit of the seasonal average. So far, driving season has failed to live up to expectations of stockpile draws.
Further weighing on prices, the active rig count in the U.S. increased last week for the 23rd week in a row, an rather ominous climb—for OPEC, anyway—that supports the theory that OPEC production cuts are but a window of opportunity for US shale at current—or even lower—prices.
By Julianne Geiger for Oilprice.com
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