As the oil industry continues to struggle with oil price shocks, the U.S. Energy Information Administration reported a crude oil inventory build of 1.6 million barrels for the week to March 20.
Gasoline and distillate fuel stockpiles, however, have been declining substantially since the start of the month. For the first week of March, gasoline inventories fell by 5 million barrels, while during the second week of the month, they shed another 6.2 million barrels. The most recent data for last week suggests that gasoline inventories fell by 1.5 million barrels.
Distillate fuel stockpiles last week shed 700,000 million barrels after during the previous two weeks, they declined by a combined 9.3 million barrels.
Gasoline production averaged 9 million bpd last week, versus 10 million bpd a week earlier. Distillate fuel production averaged 4.8 million bpd last week, versus 4.7 million bpd the week before. In total, refineries processed an average of 15.8 million bpd, compared with 15.8 million bpd a week earlier.
Meanwhile, oil priced got a brief respite at the beginning of the week, with West Texas Intermediate adding more than 2 percent Monday on hopes the U.S. legislation would approve an economic stimulus package. The package is worth $2 trillion and is aimed at mitigating the worst of the effects the Covid-19 pandemic would have on the U.S. economy.
Another thing that helped oil prices is the weaker dollar; the U.S. currency dropped after the Federal Reserve made not one but two emergency rate cuts this month and yesterday announced further measures to prop up the economy. As a result, oil, which is traded in dollars internationally, became a tiny little bit more attractive for buyers.
"Oil is clawing its way higher mainly on the back of the weaker dollar that stemmed from the Fed's unprecedented measures," OANDA senior market analyst Edward Moya told Reuters. Unfortunately, "WTI crude volatility will remain high and traders should not be surprised if this rally eventually gets faded."
At the time of writing, WTI was trading at $23.03, down from yesterday's close, and Brent crude was trading at $28.75, also down from Tuesday's close.
By Irina Slav for Oilprice.com
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