The Energy Information Administration rattled oil bulls by reporting a build of 1.9 million barrels in U.S. crude oil inventories for the week to February 2. The report comes a day after the release of the latest Short-Term Energy Outlook that saw the EIA projecting local oil production will hit the 11-million-bpd mark late this year, with the average for the year seen at 10.6 million bpd.
Prices felt the blow of these revised projections and will likely continue to feel it for a few more days. At the time of writing, West Texas Intermediate traded at US$63.84 per barrel, with Brent at US$67.55 a barrel.
The inventory report by the EIA is once again in conflict with figures from the American Petroleum Institute, which surprised analysts with a 1.05-million-barrel decline, versus expectations for 3.19 million barrels more. Analysts expected the EIA to report a decline of 480,000 barrels. During the first month of the year, the EIA reported a total draw of 6.1 million barrels, with three weeks of draws since January 1, and one week of a build.
Gasoline stockpiles continued to increase last week, the EIA also said. The build was a hefty 3.4 million barrels, following three weekly builds since the start of 2018 and one weekly draw, of 2 million barrels, reported last week.
While the market is still digesting the STEO projections, the impact from EIA’s weekly inventory could still be significant due to the size of the build. Gasoline figures are also bound to affect prices.
Speaking of gasoline, production increased last week, averaging 10.1 million bpd, versus 9.6 million bpd a week earlier, with refineries processing some 16.8 million bpd of crude oil, compared with 16 million bpd a week earlier. Given the increase in production of the fuel, the build in inventories should weigh further on crude oil prices.
By Irina Slav for Oilprice.com