Crude oil prices ticked lower today after the U.S. Energy Information Administration reported an estimated 8.4-million-barrel build in crude oil stocks for the second week of January.
This compared with a substantial build of 19 million barrels estimated for the previous week by the EIA. Despite its size, the build failed to move prices much as hopes for a quick rebound in Chinese oil demand offset any bearish effect the build would have otherwise had on prices.
For the second week of the month, the EIA also reported mixed estimates for fuels. Gasoline stocks rose and middle distillate stocks declined over the reporting period.
In gasoline, the EIA estimate an inventory build of 3.5 million barrels for the second week of January, with production averaging 8.9 million barrels daily.
This compared with an inventory build of 4.1 million barrels for the previous week and production of 8.5 million barrels daily.
In middle distillates, the EIA estimated an inventory decline of 1.9 million barrels for the week to January 13, with production averaging 4.6 million bpd.
This compared with an inventory decline of 1.1 million barrels for the previous week and production of 4.5 million barrels daily.
In middle distillate world, some are bracing up for higher diesel prices after the EU embargo on Russian fuels comes into effect in early February. The embargo, a Wood Mackenzie analyst told CNN, could shift global fuel routes, tighten supply, and push consumer prices higher since diesel is the fuel used by freight vehicles.
Europe could switch from Russian diesel to U.S. and Saudi diesel, Mark Williams explained, but since the U.S. and Saudi Arabia are farther from the continent, the price of that diesel will be higher.
Meanwhile, Russia could replace Europe with buyers in Africa and Latin America, which typically import fuels from the U.S., which would again affect the price of the fuel.
The shift in global fuel flows comes amid an already tight global supply of middle distillates resulting from a faster-than-expected rebound in demand for such fuels post pandemic.
By Irina Slav for Oilprice.com
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