Crude oil prices rose today after the Energy Information Administration reported a crude oil inventory decline of 3.1 million barrels for the week to December 11.
The report came out a day after the American Petroleum Institute estimated inventory builds across crude and fuels, pressuring prices just as they had started to improve again.
Analysts had expected the EIA to report a 3.5-million-barrel decline in crude oil inventories for the week to December 11, after it estimated a huge build of over 15 million barrels for the previous week.
In gasoline, the authority reported an inventory build of 1 million barrels for last week, which compared with a hefty increase of 4.2 million barrels for the previous week, following another increase, of 3.5 million bpd for the week before that. Gasoline production last week averaged 8.5 million bpd, which compared with 8.3 million bpd a week earlier.
In middle distillates, the EIA estimated an inventory increase of 200,000 barrels for the week to December 11, compared with a build of 5.2 million barrels for the previous week and another, of 3.2 million barrels, for the week before that. Distillate fuel production averaged 4.6 million bpd last week, compared with 4.7 million bpd for the prior week.
API’s inventory report surprised market participants, causing a decline in prices, which was also fueled by renewed worry about demand as several European countries reinstated or tightened their movement restrictions—despite the upcoming holidays—to stem the spread of the coronavirus.
It appears the initial enthusiasm about oil demand recovery driven by mass vaccinations has started to wear off as the challenges come to the surface in terms of availability and distribution. These challenges mean it will take more than a few weeks to vaccinate enough people to be able to talk about a return to normal, just like medical experts warned at the height of the vaccine hype a month ago.
By Irina Slav for Oilprice.com
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The global oil market has learnt to ignore such announcements as irrelevant. The fundamentals of the global oil market are the only ones that impact oil price movements.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London