Oil Prices Unmoved By Bullish EIA Report

A day after the American Petroleum Institute helped prop WTI up by reporting a 6.356-million-barrel inventory draw, the Energy Information Administration chimed in, reporting a much smaller decline of 1.9 million barrels in crude oil inventories for the week to November 17.

At 457.1 million barrels, the EIA said, crude oil inventories are within the upper half of the seasonal average. Analysts polled by Platts expected a draw of 2.1 million barrels in crude oil inventories and a build of 1 million barrels in gasoline stockpiles.

According to the EIA, gasoline stockpiles remained unchanged last week, after a 900,000-barrel build in the previous reporting period. That build followed a hefty build of 3.3 million barrels a week earlier and is more normal for this time of year when there is less driving and less demand for the most popular passenger vehicle fuel.

Gasoline production last week averaged 10.4 million barrels daily, the EIA also said, up from 9.9 million bpd in the week before. Refineries operated at 91.3 percent of capacity, processing 16.8 million barrels of crude daily, versus 16.6 million bpd a week earlier.

In addition to doubts about the OPEC oil deal extension, this week WTI received support from Canada: the closure of TransCanada’s 600,000-bpd Keystone pipeline due to a leak offered fresh support to prices, suggesting next week’s EIA report could include another inventory draw as a result of this suspension.

As for OPEC’s meeting, most analysts are still certain it will result in an extension, despite reports that Russia may not be all-in. In fact, according to some, these reports are only a tool to get prices even higher prior to the extension announcement, which won’t be a great surprise, so it will not have that much of a boosting effect on prices.

In the meantime, traders remain wary of making any big bets on oil in case something unforeseen happens in the run-up to the OPEC meeting, due next Thursday. WTI traded at US$57.73 a barrel at the time of writing, and Brent crude was changing hands at US$62.69 a barrel.

By Irina Slav for Oilprice.com