Crude oil prices fell today after the Energy Information Administration reported an inventory increase of 2.7 million barrels for the week to April 12.
That compares to a strong production of 5.8 million barrels for the previous week and an estimated production of 4 million barrels for the week to April 12, as the American Petroleum Institute reported Tuesday.
At the same time, the EIA reported lower prices for gasoline and middle distillates, which at the time of writing had not changed the direction of oil prices.
In the gasoline sector, the authority estimates a drawdown of stocks of 1.2 million barrels for the week preceding April 12, compared to a modest increase of 700,000 barrels for the previous week.
Gasoline production during the reporting period averaged 9.4 million barrels per day. This represents a slight decrease compared to the previous week.
In the middle distillates sector, the authority estimates a drop in stocks of 2.8 million barrels for the week preceding April 12. This compared to an increase of 1.7 million barrels for the previous week.
Middle distillate production for the period averaged 4.6 million barrels in the week to April 12, virtually unchanged from the previous week.
Oil prices, meanwhile, extended their decline that began earlier this week, driven by apparent expectations that the risk of a serious supply disruption following the military escalation in the Middle East is rather limited. API’s estimation of inventory build-up also contributed to putting pressure on prices.
“For now, the near-term weakness in oil prices may reflect some expectations that tensions may still be contained and that other major oil producers such as Saudi Arabia may step in to soften any oil shocks. global supply,” Yeap Jun Rong, an analyst at IG, told Reuters. earlier today.
“Our base case scenario is one where tensions remain contained, thereby avoiding a broader conflict that would disrupt oil supplies,” Han Zhong Liang, an analyst at Standard Chartered, told Bloomberg, suggesting the risk of escalation appears be limited at the moment, thus helping to keep prices low.
At the time of writing, Brent crude was trading at $89.10 per barrel and West Texas Intermediate was changing hands at $84.55 per barrel, both down from the open.
By Irina Slav for Oilprice.com
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