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The American Petroleum Institute (API) reported a major drawdown on U.S. crude oil inventories of 3.595 million barrels—one-third of last week’s API-reported draw of 9.2 million.
Cushing inventories were also down 462,000 barrels, for the week ended August 18.
Gasoline inventories rose significantly, up 1.402 million barrels, while distillates were up 2.048 million barrels.
At 4:49 pm EST, right after the API data release, WTI was at $47.63, while Brent was trading at $51.69.
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On Friday, crude oil prices had spiked following a report indicating a decline in U.S. E&P activity. At the same time, this was followed by Australian mining giant BHP Billiton’s announcement that it would be exiting U.S. shale entirely.
Also weighing in on oil prices this week so far has been news that OPEC’s November meeting would discuss the fate of the current agreement--whether it would extend the cuts further or decide to terminate it.
“At our next meeting at the end of November...the most important items will concern the fate of the agreement to extend or terminate the production cut,” Kuwait Minister Essam al-Marzouq said in an interview with Kuwait TV on Monday, as carried by Reuters.
At the same time, OPEC’s committee set up to monitor compliance with the cuts is meeting in Vienna to discuss slipping conformity with the pledges. Citing two sources in the know, Reuters reports that estimates are for a combined compliance of 94 percent for July. The IAE disagrees, however, saying that OPEC compliance slipped to 75 percent in July, from 77 percent in June. Compliance within the non-OPEC group of producers party to the cuts was 67 percent. Combined, the 22 producers that have pledged to cut production are overproducing a total of 470,000 bpd, according to the IEA.
Last week, the Energy Information Administration (EIA), reported a US crude inventory draw of 8.9 million barrels, after a draw the week earlier of 6.5 million barrels.
The EIA report on oil inventories is due on Wednesday at 10:30 a.m. EDT.
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.