Crude oil prices inched up further today after the Energy Information Administration reported a crude oil inventory draw of 4.4 million barrels for the week to September 11. Fuel inventories were mixed.
At 496 million barrels, the EIA said, crude oil stockpiles continue to be above the five-year average for this time of the year.
Analysts had expected an inventory build of a bit over 2 million barrels for the period, after last week the EIA reported a build of the same amount for the first week of September.
Gasoline inventories, the authority said, shed 400,000 barrels in the second week of September. That’s compared with a draw of 3 million barrels for the previous week. Gasoline production averaged 8.8 million bpd in the week to September 11, compared with 8.9 million bpd a week earlier.
Driving season has been weak this year, unsurprisingly for many, although some still hoped that it would lead to major drawdowns in both crude oil and gasoline inventories in the world’s largest oil consumer. Once it ended, more builds can reasonably be expected.
In distillate fuels, the situation remains precarious. Inventories added 3.5 million barrels in the second week of September, compared with a draw of 1.7 million barrels for each of the previous two weeks.
Distillate production averaged 4.4 million bpd last week, virtually unchanged on a week earlier. That was down from 4.8 million bpd during the first week of September. Inventories remain about 20 percent above the five-year average as air travel remains constricted by pandemic-related restrictions and concerns.
Oil prices have been depressed this week, as BP said the era of oil demand growth is very likely over and the IEA revised down its demand projections for this year, now expecting an 8.4-million-bpd contraction, down from an 8.1-million-bpd contraction it forecast in its August monthly report.
Platform evacuation in the Gulf of Mexico ahead of Hurricane Sally provided some support for prices but it was only temporary as producers are ready to restart production quickly.
At the time of writing, Brent crude was trading at $41.44 a barrel, with West Texas Intermediate at $39.23 a barrel, both up by more than 2 percent since opening.
By Irina Slav for Oilprice.com
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It is the strong fundamentals in the global oil market particularly China’s powerful rebound that is behind the rise in prices.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London