Crude oil prices remained unchanged after the Energy Information Administration reported a crude oil inventory build of 800,000 barrels for the week to February 28. Gasoline inventories, however, fell substantially.
This compares with a modest inventory increase of 500,000 bpd a week earlier, and analyst expectations of a 3.3-million-barrel build. Yesterday, the American Petroleum Institute said it had estimated crude oil inventories to have added 1.7 million barrels, which led to a further improvement in prices as the market had braced up for a more sizeable inventory increase.
In gasoline, the EIA reported an inventory decline of 4.3 million barrels for the last week of February, compared with a draw of 2.7 million barrels for the previous week. Gasoline production last week averaged 9.8 million bpd, virtually unchanged on a week earlier.
In distillate fuels, the agency reported an inventory fall of 4 million barrels and average production of 4.6 million bpd. This compared with an inventory decline of 2.1 million barrels and production of 4.8 million bpd a week earlier.
After getting pummeled last week amid the growing coronavirus panic, this week oil got some relief in the form of news that OPEC was discussing additional production cuts of 1 million bpd rather than the initial 600,000 bpd that the cartel had proposed last month. The group is meeting later this week in Vienna and many expect good news to come from there.
Expectations of central bank action to counter recession fears also served to support oil prices as did the Fed's decision to cut rates by half a percentage point in response to coronavirus-related fears for the U.S. economy that last week pushed mortgage rates close to all-time lows.
The outlook for the rest of the year is not particularly optimistic, either. Morgan Stanley just joined the ranks of forecasters that expect global oil demand to grow by less than previously expected, all because of the coronavirus epidemic.
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