After a week-long rally that eventually saw Brent and WTI both jump the US$50 barrier for the first time in a month, this week produced a string of bad news that squashed prices yet again. The EIA bucked the negative trend, however, and reported a 1.5-million-barrel draw in commercial oil inventories.
Yesterday, news about higher July OPEC oil exports from Kpler coupled with three estimates about the cartel’s production from Bloomberg, Reuters, and Petro-Logistics, all of which saw it higher than in June. With exports hitting their highest monthly levels so far this year and production up by between 90,000 bpd (Reuters) and 210,000 bpd (Bloomberg), OPEC was once again a headwind for prices.
To add insult to injury, the American Petroleum Institute surprisingly reported an inventory build, and not a small one. At 1.779 million barrels, the estimate was in stark contrast to analyst expectations of a decline. Two separate polls, by Reuters and by Platts, had anticipated a fall at 2.9 million bpd and 2.8 million bpd, respectively.
EIA’s report will sure give oil bulls a break. According to the authority, total crude oil inventories stood at 481.9 million barrels last week, within seasonal limits, and refinery runs averaged 17.4 million bpd, almost unchanged from 17.3 million bpd a week earlier. Related: Have Oil Majors Really Adapted To $50 Oil?
Gasoline production came in at a daily average of 10.3 million barrels, compared with 10.4 million bpd a week earlier. Inventories of the fuel fell by 2.5 million barrels, reinforcing optimism. In the week prior, they fell by 1 million barrels, and the API estimated a sharp decline for last week, of 4.827 million barrels. Platts analysts forecast a 1.3-million-barrel draw in gasoline inventories.
Profit season continues, with U.S. independents reporting this and next week. Judging by the performance of Big Oil, their financial results should be stronger than the figures for last year’s second quarter thanks to higher oil prices and cost discipline.
By Irina Slav for Oilprice.com
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