After reporting a 2.6-million-barrel inventory draw last week, the Energy Information administration this week had more good news for oil bulls, estimating that crude oil inventories to have gone down by 4.3 million barrels in the week to August 31.
Yesterday, the American Petroleum Institute reported an estimated 1.17-million-barrel draw in inventories, while analysts polled by IG Group expected an even more moderate draw, of 880,000 barrels. A Reuters analyst poll anticipated a bigger draw of 1.9 million barrels.
The EIA also reported a 1.8-million-barrel increase in gasoline inventories and a 3.1-million-barrel build in distillate inventories. These numbers compare with a draw of 1.6 million barrels in gasoline inventories a week earlier and an 800,000-barrel build in distillate inventories.
Refineries processed 17.6 million barrels of crude daily last week, churning out 10.2 million barrels of gasoline and 5.4 million barrels of distillate daily.
Imports averaged 7.7 million bpd in the week to August 31, while production likely stayed at record highs of 11 million bpd.
At the time of writing, West Texas Intermediate was trading at US$68.48 a barrel and Brent was at US$77.38 a barrel.
EIA’s figures, like API’s yesterday, are unlikely to have a deep impact on prices, outshined by other factors, chief among them the possibility of a further escalation in the U.S.-China trade spat. Today marks the end of the public comment period for another round of tariffs on US$200 billion worth of Chinese products. As soon as it is implemented, China is expected to retaliate.
Another headwind for prices is the ripple effect from Turkey’s currency crisis, which could dampen demand for crude oil. For now, this is only another cause for concern rather than a reality, but it does look like demand-side risks are multiplying, despite the upbeat mood demonstrated this week by OPEC’s Mohammed Barkindo, who said global oil demand would hit the 100-million-bpd mark sooner than expected, before this year’s end.
WTI started to tumble shortly after the EIA data release as builds in gasoline and distillate stocks outweighed the surprise crude draw.
By Irina Slav for Oilprice.com
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