Crude oil prices fell after the Energy Information Administration reported an 8-million-barrel build in U.S. crude oil inventories for the week to September 28. Although expected by some analysts and industry observers, the build was substantial enough to hurt prices.
A day after the American Petroleum Institute reported a modest inventory build of less than a million barrels, EIA’s figures are likely to push prices further down in the next couple of days as the oil market writhes in the throes of supervolatility brought about by the impending U.S. sanctions against Tehran and the uncertainty surrounding other producers’ capacity to increase production quickly enough to offset any supply loss, despite new assurances from Riyadh Saudi Arabia will boost its output in October and November.
Yet demand is also beginning to worry analysts and traders: with Brent crude at over US$80 and climbing closer to US$85 a barrel, some of the world’s biggest importers, notably India, would be quick to start curbing their intake. With forecasts about the benchmark hitting US$100 a barrel before the end of December, chanced are importers are bracing up for a fatter bill that will affect their economic growth prospects and future oil demand.
Demand in the United States is also seen to weaken in the last three months of the year, as it usually does during the winter season because of refinery maintenance season and less driving. As a result, analysts have been warning of inventory builds in both crude and fuels. Related: Citi: Brent-WTI Spread Could Widen To 5-Year High
The EIA reported a 500,000-barrel decline in gasoline stockpiles for the final week of September, compared with a 1.5-million-barrel build a week earlier. Gasoline production averaged 10 million bpd last week, compared with 9.8 million bpd in the prior week.
In distillate fuel, the EIA reported an inventory draw of 1.8 million barrels, versus a draw of 2.2 million barrels a week earlier. Distillate production stood at 5 million bpd in the last week of September, unchanged on the week. Refineries processed 16.6 million bpd of crude in the reporting period, up by 77,000 bpd from the previous week’s 16.5 million bpd.
By Irina Slav for Oilprice.com
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