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The American Petroleum Institute (API) reported on Tuesday a draw in crude oil inventories of 6.829 million barrels for the week ending July 24.
Analysts had predicted a modest inventory build of 357,000 barrels.
In the previous week, the API reported a significant—and unexpected--build in crude oil inventories of 7.544 million barrels, after analysts had predicted a draw.
This week’s estimate would seem to undo last week’s shocking inventory build.
WTI was trading down on Tuesday afternoon before the API’s data release, as prices recoiled as the government haggles over the next stimulus bill with both the Senate and the House divided and proposing their own legislation.
Delays in the next stimulus bill are expected to have a negative effect on oil markets, even with strong OPEC action and 2 million bpd less in US oil production.
Oil production in the United States has now fallen from 13.1 million bpd on March 13 to 11.1 million bpd for July 17, according to the Energy Information Administration, after sitting for the previous four weeks at 11 million bpd.
At 4:23 pm EDT on Tuesday, the WTI benchmark was trading down on the day by $0.67 (-1.61%) at $40.93—almost $1 below last week’s levels. The price of a Brent barrel was trading down as well, by $0.24 (-0.55%), at $43.17—also roughly $1 per barrel lower than this time last week.
The API reported a build of 1.083 million barrels of gasoline for the week ending July 24—compared to last week’s 2.019-million-barrel draw. This week’s build compares to analyst expectations for a 733,000-barrel draw for the week.
Distillate inventories were up by 187,000 barrels for the week, compared to last week’s 1.357-million-barrel draw, while Cushing inventories saw an increase of 1.144 million barrels.
At 4:34 pm EDT, WTI was trading at $40.97 while Brent was trading at $43.20.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
It takes some 750 oil rigs to produce 7 mbd of US shale oil virtually accounting for 60% of total US oil production. With 180 rigs in operation, it means that shale oil production has declined to 1.78 mbd. Adding some 5.2 mbd of conventional oil production gives a total US production of 6.98 mbd. This is projected to be the level of US production during the coming years.
Many oil experts are aware that the EIA has been inflating US oil production figures since the inception of the US shale oil industry.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London