The Energy Information Administration reported an decline in crude oil inventories of 2.6 million barrels for the week to March 16, pushing up prices in concert with rising Middle Eastern tensions, worries about Venezuela’s production slide despite rising output in the United States.
Stimulated by yesterday’s surprise crude stockpiles decline estimated by API, at 2.74 million barrels, WTI today traded at US$64.24 at the time of writing, with Brent crude at US$67.97 a barrel.
Last week the EIA surprised markets by reporting a heavy build of 5 million barrels.
In gasoline, the EIA reported a 1.7-million-barrel inventory decline, on top of the 6.3-million-barrel fall reported for the previous week. Gasoline production averaged 9.9 million barrels in the week to March 16, with refineries operating at 91.7 percent of capacity and processing 16.8 million barrels of crude daily.
Meanwhile, worries about an escalation between Saudi Arabia and Iran deepened as Crown Prince Mohammed began his two-week visit to the United States with a meeting with President Trump, during which the question of the regional balance of power was likely one of the top priorities. Concerns that Trump could pull out of the Iran nuclear deal also had a positive effect on prices.
On the other hand, Reuters energy markets analyst Amanda Cooper tweeted that the physical oil market was weak, even taking into account seasonal peculiarities. In other words, markets are still being moved more by sentiment than fact.
Perhaps the only fact-related influence over oil prices has to do with the likelihood of the U.S. reimposing sanctions on Iran. Reuters notes that, in addition to Crown Prince Mohammed’s visit to Washington, the appointment of Mike Pompeo as Secretary of State was seen as a strong signal in this direction since Pompeo was a staunch opponent to the original deal.
By Irina Slav for Oilprice.com
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