Crude oil prices continued to climb today after the Energy Information Administration reported a crude oil inventory draw of 800,000 barrels for the week to November 20.
A day earlier, the American Petroleum Institute reported an inventory build of 3.8 million barrels for the period. Analysts had expected the EIA to report a modest 127,000-barrel build in inventories. A week earlier, the EIA estimated a crude oil stock draw of 800,000 barrels as well.
In gasoline, the EIA reported an inventory increase of 2.2 million barrels for the week to November 20, compared with a build of 2.6 million barrels for the previous week.
Gasoline production averaged 8.9 million bpd, compared with 9.1 million bpd for the previous week.
In distillate fuels, the authority reported an inventory draw of 1.4 million barrels for last week, which compared with a hefty decline of 5.2 million barrels for the previous week.
Distillate fuel production last week averaged 4.6 million bpd, compared with 4.3 million bpd a week earlier.
Refineries processed 14.3 million bpd of crude oil last week, up considerably on the week before, when processing rates averaged 13.8 million bpd. Related: Climate Targets Could Slash Natural Gas Investment By $1 Trillion
Oil prices this week hit the highest since March, mostly on the back of more positive news about Covid-19 vaccines. Traders have shunned warnings about the early nature of the positive efficacy and safety results reported by pharma companies, betting big on a quick rebound in oil demand thanks to mass vaccinations. These vaccinations are still in the future, however, which puts the rally on shaky foundations.
In addition, the market has priced in a pending decision by OPEC+ to extend the current production cuts of 7.7 million bpd into next year, even though internal divisions within OPEC have caused some worry. Although all members of the cartel need oil prices much higher, not all of them are eager to continue cutting oil production, which is vital for their economies.
By Irina Slav for Oilprice.com
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The draw is a drop in the ocean of an existing glut in the market estimated at 500 million barrels. Furthermore, how could a draw 800,000 barrels have more effect on oil prices than an inventory build of 3.8 million barrels as reported by the American Petroleum Institute?
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London