EIA Report Sees Brent Break $50

Crude oil inventories are down by 4.1 million barrels from the previous week, sitting at 526.6 million barrels, according to official U.S. crude oil inventory data released Wednesday by the Energy Information Administration (EIA).

This is the sixth consecutive drop in U.S. crude oil inventories.

Oil futures further boosted gains Wednesday on the EIA data for the week ended 24 June, with West Texas Intermediate (WTI) for August delivery at $48.91 per barrel on the New York Mercantile Exchange—up US$1.06 or 2.2 percent from the close on Tuesday.

Brent crude was up 3.33 percent to US$50.02 Wednesday.

The EIA’s data confirms a larger draw that the American Petroleum Institute (API) had reported Tuesday, and also beats analysts’ expectations.

The API Tuesday said U.S. stockpiles fell by 3.9 million barrels in the week to June 24--significantly more than the 2.4 million barrels seen by analysts polled by Reuters.

For the week ended 17 June, the API had said inventories had plummeted by 5.2 million barrels, but EIA data revealed that the draw was much more moderate, at less than a million barrels.

Barrel prices plummeted after the United Kingdom’s decision to leave the European Union last week. Brent oil has been approaching $52 a barrel before uncertainty in international markets and the pound’s devaluation caused the price to plummet.

According to the EIA, total motor gasoline inventories increased by 1.4 million barrels last week, while distillate fuel inventories decreased by 1.8 million barrels. Total commercial petroleum inventories decreased by 1.0 million barrels last week.

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Crude oil refineries in the United States processed 16.7 million barrels a day in the week ending on June 24th - 190,000 bpd more than the week before. On average, the refineries operated at 93 percent capacity.

In contrast, gasoline production in the U.S. decreased last week, averaging at 10.0 million barrels per day and distillate fuels were churned out at a rate of 5.0 million bpd.

U.S. crude oil imports dropped by 884,000 to 7.6 million bpd over the past seven days. The four-week oil imports average stands at 7.8 million bpd, the report said.

By James Burgess of Oilprice.com

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