Oil rises as EIA reports inventory is rising across the board

Crude oil prices rose today after the US Energy Information Administration reported a decline in inventories for the week to August 16.

They lost 4.6 million barrels in the period, compared with a 1.4 million barrel build that surprised traders last week.

On Tuesday, the American Petroleum Institute reported another unexpected but moderate rise in inventories to 347,000 barrels.

For fuels, the EIA also estimated stockpiles.

Gasoline inventories fell 1.6 million barrels in the week to Aug. 16, compared with a draw of 2.9 million barrels for the previous week.

Gasoline production averaged 9.8 million barrels per day last week, compared with 9.7 million barrels per day for the previous week.

For middle distillates, the authority reported a drawdown of 3.3 million barrels for the week to August 16, compared with a drawdown of 1.7 million barrels for the previous week.

Middle distillate production last week averaged 4.9 million barrels per day, compared with 4.8 million barrels per day for the previous week.

Meanwhile, oil prices remain low, with the API inventory report becoming the latest contributor despite the modest size of the estimated build. In addition, hopes of a ceasefire in the Middle East also weighed on oil prices as they reduced the risk of a supply disruption and the perception of weak demand from China remained stable.

“While weaker Chinese demand has been well reported, refinery margins around the world have been under pressure for much of August, suggesting that these demand concerns are not isolated to China,” ING analysts said, as quoted by Reuters, suggesting there could be more pain for oil bulls ahead.

On the other hand, “We think any drop in oil prices related to a Gaza ceasefire is likely to be short-lived,” Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg, adding that this is because the real chances for a ceasefire to be signed by Israel and Hamas were slim.