The Energy Information Administration reported a 2.4-million-barrel build in crude oil inventories for the week to August 2, shattering expectations of another sizeable draw.
Analysts had expected a draw of 3.13 million barrels after last week the authority reported a hefty 8.5-million-barrel decline in inventories that sent West Texas Intermediate soaring.
The American Petroleum Institute reported yesterday another weekly decline in oil inventories, of 3.4 million barrels, but this time the figure failed to impress. With EIA rejecting it, chances are the slide in oil prices will now accelerate.
The EIA's figures are also unlikely to reverse the drop in oil prices, which started this week with the spike in now chronic trade tensions between the United States and China, with Washington accusing Beijing of manipulating its currency to its advantage, after the yuan dropped on Monday to the lowest against the greenback in more than 10 years.
The EIA also reported an increase in gasoline inventories, which will not help prices, either. After a 1.8-million-barrel decline for the week to July 26, last week these added 4.4 million barrels. Gasoline production averaged 10.4 million bpd, a modest increase from last week's average daily production rate.
In distillate fuels, the EIA reported an inventory build of 1.5 million barrels, which compared with a decline of 900,000 barrels for the previous week. Distillate fuel production averaged 5.3 million bpd, compared with 5.2 million bpd a week earlier.
With the U.S.-China tensions stoking fears about oil demand and economic growth on a global scale, it's hardly any wonder prices are falling despite the strongly bullish factor that is the Middle East and specifically Iran. However, it seems in the past couple of weeks the bearish factors are prevailing if hedge funds are any indication: their bets on oil were precariously balanced between bullish and bearish last week, with money managers divided in their response to mixed market signals.
At the time of writing, Brent crude traded at US$57.39 a barrel and West Texas Intermediate changed hands for US$52.00 a barrel, both benchmarks down from yesterday's close by over 2 percent.
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
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