A day after yet another bullish oil inventory estimate from the American Petroleum Institute, the Energy Information Administration reported another solid decline in inventories, which added fuel to the price rally.
The EIA said crude oil inventories had shed 8.5 million barrels in the week to July 26, to a total 436.5 million barrels, which was at the five-year average for this time of the year.
This compares with a 10.8-million-barrel inventory draw a week previously that helped WTI move a lot closer to the US$60 mark in combination with other factors, chief among them geopolitical concerns focused on the Middle East.
Analysts had expected the EIA to report an inventory decline of 1.82 million barrels for the week to July 26.
The EIA went on to report a 1.8-million-barrel decline in gasoline inventories for last week. This compares with a 200,000-barrel decline in inventories a week earlier.
In distillate fuels, the authority reported a 900,000-barrel fall, which compared with an increase of 600,000 bpd a week earlier.
In production, the EIA reported an average gasoline production rate of 10.4 million bpd for last week, up from 10.1 million bpd a week before that. Distillate fuel production averaged 5.2 million bpd, slightly down on a week earlier. Related: Tesla Just Lost Its Chief Innovator
Refineries processed a total of 17 million barrels daily last week, unchanged on a week earlier.
Oil prices have been trending higher over the past week or so mainly on the back of updates from the Middle East that suggest tensions between the West and Iran are not going away anytime soon. The latest, out yesterday, was a statement by the commander of Iran's Navy that it will hold joint military drills with the Russian Navy in the Persian Gulf.
The announcement comes as the UK seeks to create a united European fleet to send to the Gulf to guard vessels from the Iranian Islamic Revolutionary Guard Corps after the latter seized British-flagged Stena Impero earlier this month.
At the time of writing, Brent crude was trading at US$65.09 a barrel, with West Texas Intermediate at US$58.39 a barrel, both up from yesterday's close.
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
Comments
Both the EIA and the American Petroleum Institute (API) have become very adept at
oil price manipulation by announcing steep declines in inventories when prices are declining to be followed by much steeper build in inventories when oil prices start to surge.
This practice serves two goals. One is to give the EIA a semblance of credibility. The other is to dampen oil prices the minute they start to surge.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London