Crude oil prices inched down before the EIA reported its crude inventory report today, but saw a small jump after the release, when the agency reported that crude oil inventories had added 5.5 million barrels in the week to August 5.
A week earlier, inventories added 4.5 million barrels, according to the EIA, which added to downward pressure on prices.
In fuels, the picture was mixed.
Gasoline inventories fell by 5 million barrels in the week to August 5, compared with a modest increase of 200,000 barrels for the previous week.
Gasoline production increased, averaging 10.2 million barrels daily last week, which compared with 9.3 million barrels daily a week earlier.
In middle distillates, which have fallen to critical levels this year, the EIA estimated an inventory build of 2.2 million barrels for the week to August 5. This compared with a draw of 2.4 million barrels for the previous week.
Middle distillate production averaged 5.1 million bpd last week, compared with 4.9 million bpd in the previous week.
U.S. distillate inventories have fallen to dangerously low levels and from this moment on, Reuters’ John Kemp wrote last week, “either an imminent recession reduces consumption or prices are likely to surge higher.”
Neither is a very palpable option for the Biden administration, which has been boasting about the steady decline in the past few weeks. According to EIA data cited by Kemp, distillate fuels have declined in 66 of the last 109 weeks with the accumulated draw since July 2020 at 65 million barrels.
In this context, signs are emerging that U.S. manufacturing activity may be set for a decline in the second half of this year, after peaking in the second quarter, according to the Reuters market analyst.
Meanwhile, refineries continued to operate at high run rates, the average standing at 94.3 percent of capacity last week. Refineries processed an average of 16.6 million barrels of crude daily. This compared to 15.9 million bpd for the previous week, with capacity utilization at 91 percent.
By Irina Slav for Oilprice.com
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