Oil Prices Slide On Major Gasoline Build

The Energy Information Administration reported a 5.6-million-barrel draw in crude oil inventories for the week to December 1, largely in line with the American Petroleum Institute's estimate of a 5.481-million-barrel draw that was reported yesterday. Analysts had expected a draw of 3.507 million barrels.

But more notably, the API had yesterday reported a staggering 9.196-million-barrel build in gasoline inventories-when analysts had expected a small build of just 1.145 million barrels. The EIA today confirmed a large build of 6.8 million barrels.

US crude oil imports averaged 7.2 million barrels per day last week-a decrease of 127,000 barrels per day from the previous week. The EIA said refineries last week processed 17.2 million barrels of crude per day, producing 9.8 million barrels per day of gasoline, down from 10.2 million bpd in the previous week.

Prices have been stubbornly resistant to OPEC's promise to extend the OPEC production cuts to the end of 2018, dropped yesterday as the API reported the surprisingly large gasoline inventory build. Both WTI and Brent crude benchmarks continued to fall in after-hours trading yesterday, settling at $57.36 and $62.60 respectively around 9:00pm EST. The benchmarks continued to fall overnight, and at 7:42am EST, they were trading at $56.90 and $62.21. Related: The 'Mega' Oil Field That Will Never Boom

Despite the price drop, the extension of the OPEC and allies' production cut deal through the end of 2018 continues to sent a stronger signal that the oil market rebalancing could speed up and send WTI oil prices to average $54.78 a barrel in 2018, up from a previous projection of $52.50, a Reuters poll of 30 analysts and economists showed on Wednesday.

At the time of writing, WTI was trading at US$56.71 a barrel, with Brent at US$62.02, both down from yesterday's close.

By Julianne Geiger for Oilprice.com

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