Oil falls as EIA confirms low crude and gasoline output

Crude oil prices fell today after the Energy Information Administration reported an estimated increase in inventories of 800,000 barrels for the week to September 6.

This compared to a draw of 6.9 million barrels for the previous week, which however failed to move prices in a positive direction as it was drowned out by pessimism about demand.

On Tuesday, the American Petroleum Institute estimated that oil inventories fell by 2.79 million barrels in the week to September 6.

On the fuel front, the EIA also estimated inventories for this week.

On gasoline, the authority reported a 2.3 million barrel increase in inventories for the period, with production averaging 9.4 million barrels per day.

That compares with a stockpile of 800,000 barrels for the previous week, when production averaged 9.7 million barrels a day.

For middle distillates, the EIA forecast a stockpile increase of 2.3 million barrels for the week to Sept. 6, with production averaging 5.2 million barrels a day.

That compared with a modest 400,000-barrel drop in inventories for the previous week, when output averaged 5.2 million barrels a day.

Pessimism about demand, meanwhile, strengthened earlier in the week after OPEC revised its forecast for demand growth for the year for the second time in two months. The group now expects demand growth of 2.03 million barrels per day this year and 1.74 million barrels per day next year. That’s down from 2.11 million bpd and 1.78 million bpd respectively in OPEC’s monthly oil market report for August.

However, prices rallied earlier today, largely driven by expectations of disruption in the Gulf of Mexico as Tropical Storm Francine strengthened into a hurricane, which forecasters expect to make landfall in Louisiana later during the day.

Already, a quarter of oil production capacity has been shut down in the Gulf of Mexico, the U.S. Environmental Protection Agency announced Tuesday. There were also reports that Exxon was going to cut production at its Baton Rouge refinery to just one-fifth of capacity before Francine made landfall.

By Irina Slav for Oilprice.com

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