A day after the American Petroleum Institute reported yet another estimated weekly build in U.S. oil inventories, the Energy Information Administration rejected it, reporting a draw of 1.7 million barrels for the week to October 18.
This interrupts a four-week string of inventory builds as prices trend lower on global economic growth concerns and its adverse impact on oil demand. Last week, the EIA reported a 9.3-million-barrel increase in inventories sending prices nosediving.
The authority also reported that at 433.2 million barrels, inventories were at the five-year average for the season, with refineries processing a daily average of 15.9 million barrels. This compares with 15.4 million bpd for the previous week.
Gasoline production averaged 10.1 million barrels daily last week, with inventories shedding 3.1 million barrels. A week earlier, gasoline production stood at 10 million bpd, with inventories of the fuel declining by 2.6 million barrels.
In distillate fuels, the EIA reported an average daily production of 4.8 million barrels and an inventory decline of 2.7 million barrels. This compares with production of 4.7 million bpd a week earlier, and an inventory decline of 3.8 million barrels. Related: Is Eating Meat Worse Than Burning Oil?
Oil prices yesterday got a temporary respite when reports emerged that OPEC was considering a deepening of the production cuts it agreed in December last year to prop up prices. That coupled with positive signs about U.S.-Chinese negotiations, but today oil was down once again as the effect of the good news without any follow-up official confirmation fizzled out.
At the time of writing, Brent crude was trading at $59.78 a barrel, and West Texas Intermediate was changing hands at $54.47 a Barrel, both down from yesterday's close.
This trend suggests OPEC may need to change tack. In fact, as Bloomberg's oil strategist Julian Lee wrote in a recent commentary, Saudi Arabia would do well to consider a U-turn in OPEC policy and turn the taps back on. This way, Lee argued, it would stop "subsidizing" U.S. shale and other higher-cost producers.
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
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