As oil markets hold their breath for OPEC+'s announcement of the final production cuts to take place starting next year, the Energy Information Administration served a nice surprise to oil bulls by reporting an inventory draw in crude oil of 7.3 million barrels for the week to November 30.
The report came two days after the American Petroleum Institute disappointed bulls with an estimated inventory build of 5.36 million barrels for the same week, pushing WTI prices down closer to US$50 a barrel.
The EIA said refineries processed 17.5 million barrels of crude daily last week, producing 9.7 million bpd of gasoline and 5.6 million bpd of distillate fuel. A week earlier, refineries processed 17.6 million bpd, with gasoline production at 10.2 million bpd and distillate fuel production at 5.5 million bpd.
Gasoline inventories last week added 1.7 million barrels, with distillate inventories rising by 3.8 million barrels. This compared with an 800,000-barrel decline in gasoline inventories and a 2.6-million-barrel rise in distillate fuel inventories a week earlier.
Oil has been on the slide this week, pressured by uncertainties surrounding this round of OPEC+ production cuts and the surprise announcement by Qatar that it was leaving the cartel starting in January. There has been speculation that Iraq, OPEC's second-largest producer may follow as it cannot really afford to reduce its production.
A stock market dip accelerated the oil price drop, but trading was not particularly dynamic ahead of the OEPC meeting in Vienna. The cartel will release a statement later in the day, but Russia has yet to have its say, which will take place tomorrow. Its position is considered once again the maker or breaker of the cut deal, although the prevailing mood is positive, with a high degree of certainty that an agreement to reduce crude oil supply will be reached.
At the time of writing, Brent crude traded at US$59.49 a barrel, with West Texas Intermediate at US$50.74 a barrel, both down since opening.
UPDATE: OPEC failed to reveal a solid agreement in Vienna after hours of meetings. The cartel cancelled its news conference, awaiting the Russian delegation set to arrive on Friday - read more here
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
Comments
Last EIA report showed a build of over 10 million bbl of crude, Cushing stocks were about 6% above the 5-year average, and we had a notable build in Distillates. But Gasoline had a draw of a mere 700k and so the price of WTI instantly soared, as the fragile, delicate oil bulls and foreign producers won't allow WTI to fall and STAY below $50/bbl (Russia announced an agreement to production cuts, contradicting statements made just earlier last week, literally the very moment WTI fell below $50/bbl). Russia called it and since WTI has stayed above $50/bbl. Russia doesn't care about Brent being above $60/bbl they just want WTI above $50/bbl.
Now, we have build in Cushing, Distillates, AND Gasoline but a draw in crude oil inventories...will the price still surge--indicating yet another double-standard in favor of oil bulls? If there is a draw in crude oil, then WTI should go up. If there is a draw in gasoline, then RBOB should go up. But both futures products shouldn't rise just because of a draw in the other, otherwise there should not be 2 separate futures products.
Also, I can't help but find it extremely convenient for oil bulls and foreign producers that on the same day that OPEC meets, EIA shows a massive draw in crude oil inventories--despite Tuesday's API report of a build and after 10 weeks of consecutive builds.
Just seems a bit too convenient to be a coincidence...