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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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Oil Slumps On Major Inventory Build

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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  • Mitch on October 03 2018 said:
    An almost 1 million b/d decline in exports will do that. Would be nice to see some explanation on the nuances of why exports fluctuate so much at times
  • Patrick on October 03 2018 said:
    Where did you get that crude prices fell after the report? Prices were down prior to the report releasing but bounced back within minutes following the release of the report at 10:30 Eastern. For a site called oilprice.com I would expect more monitoring of the actual oil price.
  • JACK MA on October 03 2018 said:
    You cannot stop prices from rising no matter what. Prices cannot be talked down even with the best spin doctors employing their best narratives. Oil will rise to 100 and then well beyond. The only hope now for the Central Banks to collapse Russia is to send oil to 200, hurt the buyer of oil not the seller, make IMF loans to the buyer to buy 200 oil but on the condition they ONLY buy oil in dollars and not any other currency such as the Yuan or the ruble. This will be the new strategy to inflict pain on the BRICS nations. A very old strategy is that a seller is nothing without his buyer. The Central banks must therefore control the buyer so to do so, expect 200 oil. No stopping it unless the Central Banks are willing to surrender dollar hegemony. That will never happen. IMHO
  • Andrew on October 03 2018 said:
    Market completely irrational and actually climbed on the news, can't wait to see what the reasoning is

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