The Energy Information Administration reported a 1.4-million-barrel increase in crude oil inventories for the week to July 29, with the total reaching 522.5 million barrels. Yet again, this official data was in stark contrast with API estimates released yesterday.
Yesterday, the American Petroleum Institute injected some vigor into the market, reporting a draw of 1.3 million barrels for the last week of July. The figures were largely in line with expectations.
On a brighter note, however, the EIA said gasoline stockpiles fell by 3.3 million barrels last week, but distillate inventories went up by 1.2 million barrels. The agency noted gasoline stockpiles remain at an unusual high for the season. API had reported a 450,000-barrel draw in gasoline and a half-a-million-barrel buildup in distillate fuel.
Last week, the EIA reported an increase in petroleum stocks of 1.7 million barrels, which weighed on crude prices significantly, especially coupled with the build in gasoline stockpiles, which added fuel to fears that market fundamentals were far from rebalanced.
Refinery throughout was 16.9 million bpd in the week to July 29, which is an increase of 266,000 bpd on average for the week. The average operating rate was 93.3%. Gasoline production inched down to 10 million bpd, and distillate output rose to 4.9 million bpd.
Market sentiment has been increasingly bearish, with OPEC’s number one Saudi Arabia continuing to pump crude at record-high rates, despite a 40,000-barrel production decline over the month of July. Overall, OPEC output lost 80,000 bpd last month, thanks to more pipeline attacks in Nigeria and persistent production problems in Libya.
Crude did get a bit of a breather last Friday, when Baker Hughes reported just one new rig added to the total oil and gas count in the U.S. This was the fifth week of increases in a row, but the rate of increase had slowed significantly, which was the cause for an uptick in optimism.
U.S. crude inventory data has led to significant oil price volatility in recent weeks, with prices responding immediately to data based on fears that U.S. producers will feed the glut and send prices plummeting further.
WTI today opened at US$39.63 on Nymex, buoyed somewhat by the API data. Moments before EIA published the data, WTI was trading at $40.01, but at the time of writing, WTI had risen to US$40.22, after much volatility.
By Irina Slav for Oilprice.com
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