Oil steady despite large crude draw

Crude oil inventories in the United States saw a large draw this week of 6.195 million barrels, the American Petroleum Institute (API) data showed on August 15, after last week’s surprise 4.067 million barrel build.

Analysts were expecting a draw of 2.050 million barrels in US crude-oil inventories. The total number of barrels of crude oil gained so far this year is nearly 18 million barrels, according to API data, although there is a net draw in crude inventories since April of almost 30 million barrels, OilPrice.com reports.

On August 14, the Department of Energy (DoE) reported that crude oil inventories in the Strategic Petroleum Reserve (SPR) rose by 600,000 barrels in the week ending August 14, with the SPR inventory still sitting at a near 40-year low of 348.4 million barrels. At that rate of replenishment, the SPR should return to 2021 levels in a little under a decade.

The WTI and Brent benchmarks were both trading down on Tuesday morning in the run-up to the data release on continued fear about China’s economic activity and subsequent oil demand being a disappointment. By 4:15 p.m. EST, WTI was trading down 1.85 per cent, at $80.98 per barrel—down nearly $2 per barrel from this time last week. Brent crude was trading down 1.52 per cent at $84.90—down $1.10 from this time last week.

Gasoline inventories saw a build this week, rising by 700,000 barrels, more than offsetting last week’s 413,000 barrels dip in the week prior. Gasoline inventories are roughly 7 per cent less than the five-year average for this time of year. Distillate inventories fell by another 800,000 barrels, after the 2.093 million barrel draw in the week prior, and are already sitting somewhere around 17 per cent below the five-year average for this time of year.

EIA data suggests that crude oil production in the United States rose by 400,000 bpd to 12.6 million bpd for the week ending August 4. If that weekly estimate turns out to be close to accurate, that would be the single largest weekly production increase in years.

Inventories at Cushing, Oklahoma, fell by another million barrels, after falling by 112,000 barrels in the previous week.