Oil slips as EIA confirms big rise in crude inventories

Crude oil prices fell today after the US Energy Information Administration reported a rise in inventories of 5.8 million barrels for the week to October 4.

The change in inventory levels compared to a build of 3.9 million barrels for the previous week. It also follows an estimated stockpile increase of 10.9 million barrels, as reported by the American Petroleum Institute on Tuesday.

The estimate assumed oil prices, which were already reeling after traders’ expectations of further Chinese stimulus were dashed by the government in Beijing, which appears to believe the current stimulus is enough.

Meanwhile, the EIA reported a draw in gasoline inventories and a decline in average distillates for the week to Oct. 4.

Gasoline inventories fell by 6.3 million barrels over the period, with production averaging 10.2 million barrels per day.

That compared with a build of 1.1 million barrels for the previous week, when production averaged 9.6 million barrels a day.

In middle distillates, inventories fell by 3.1 million barrels in the week to October 4, with production averaging 5.0 million barrels a day.

That compared with a drawdown of 1.3 million barrels and average daily output of 4.8 million barrels.

Earlier in the week, the EIA issued an oil and gas update in which it lowered expectations for oil demand for both the United States and the world in 2025. The authority now expects global demand to add about 1.2 million bpd next year, which is down 300,000 bpd from EIM’s previous forecast. U.S. demand, according to the EIA, was set to rise 100,000 bpd less than previously expected to 20.5 million barrels per day.

However, it’s worth noting that the EIA projected weaker oil demand for much of this year as well, only to reveal in September that actual data for May and July showed an increase to multi-year seasonal highs.

Meanwhile, oil prices were relatively steady earlier in the day as fears of an escalation in the Middle East gave way to hopes of a ceasefire between Israel and Hezbollah, with one analyst pointing out that geopolitical news had distorted oil markets.

“The daily dilemma of ‘Middle East headlines’ swinging like a pendulum between ‘ceasefire talks’ and ‘further escalation of attacks’ is distracting investors from reality… Oil markets are flipped on sentiment of ‘buying the rumor’ and missing real fundamentals that should matter,” Phillip Nova’s Piryanka Sachdeva told Reuters.

By Irina Slav for Oilprice.com

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