The slide in crude oil prices accelerated after the Energy Information Administration reported a crude oil inventory build of 2 million barrels for the week to September 4.
A day earlier, the American Petroleum Institute added gloom to an already pessimistic market by reporting an inventory build of 2.97 million barrels for the same period.
Analysts had expected the EIA to report a moderate draw of a little over 1 million barrels.
A week earlier, the EIA reported a draw of 9.4 million barrels in crude oil, along with a solid decline in gasoline stocks and a more moderate one in distillate fuels. The latter are becoming a problem for refiners as their inventories remain high amid even more subdued demand than that for gasoline.
For last week, the EIA reported a draw of 3 million barrels in gasoline and a decline of 1.7 million barrels in distillate fuels. This is compared with a 4.3-million-barrel decline in gasoline stocks a week earlier and a 1.7-million-barrel draw in distillate fuel stocks.
Gasoline production last week averaged 8.9 million barrels daily, while distillate fuel production stood at some 4.4 million barrels daily. This is compared with 9.5 million bpd of gasoline and 4.8 million bpd of distillate fuels in the previous week.
Oil prices have been on a losing streak this week after optimism about the recovery in oil demand got crushed amid doubts about China’s capacity to continue buying record-high amounts of crude and as Saudi Arabia said it would reduce its prices sharply for Asian and U.S. buyers from October, signaling a marked change in its upbeat attitude from earlier this year.
Yesterday, prices recouped some of their earlier losses thanks to a rebound in stock markets, but fears that demand recovery prospects have been overestimated remained, putting a ceiling on benchmarks.
At the time of writing, Brent crude traded at $40.48 a barrel, with West Texas Intermediate at $37.66 a barrel, both down from the opening of trade today.
By Irina Slav for Oilprice.com
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