Oil prices rise on high crude stockpiles

Crude oil prices rose today after the US Energy Information Administration reported an estimated decline in inventories of 6.9 million barrels for the week to August 30.

A day earlier, the American Petroleum Institute reported its own estimate of inventories, which saw them fall by a sizeable 7.4 million barrels in the last week of August. Analysts polled by Reuters were expecting an extraction of around 1 million barrels.

The previous EIA report pegged the decline in oil inventories at a modest 800,000 barrels, with mixed changes in fuel inventories.

In the last week of August, gasoline and middle distillate stocks saw more mixed changes.

Gasoline stockpiles added 800,000 barrels in the week to Aug. 30, with output averaging 9.7 million barrels a day.

That compared with a draw in inventories of 2.2 million barrels for the previous week, when production averaged 9.6 million barrels a day.

For middle distillates, the EIA forecast a 400,000-barrel stockpile decline for the final week of August, with production averaging 5.2 million barrels per day.

That compares with an inventory of 300,000 barrels for the previous week, when middle distillates production averaged 5 million barrels per day.

Earlier in the week, API data pushed oil prices higher, and now the EIA numbers are likely to reinforce this. Reports that OPEC+ would delay a partial reversal of production cuts also helped boost oil prices, after expectations of a reversal had weighed on oil prices for weeks, even with no indication from OPEC that it would go ahead.

In any case, benchmarks have bounced back from recent lows, although bearish sentiment persists. Still, it’s not as solid as it used to be.

“The pessimism in oil markets appears to be easing after solid API data and news of OPEC+ reconsidering production hikes emerged and boosted hopes,” Phillip Nova analyst Priyanka Sachdeva told Reuters.

ING analysts, however, were of a different opinion. “Clearly, lingering concerns about demand outweigh any potential delay in this increase in supply,” wrote Warren Patterson and Ewa Manthey. “If these reports prove to be correct, the next key question is how long the group will delay increasing its supply.”

By Irina Slav for Oilprice.com

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