Crude oil prices moved lower today after the U.S. Energy Information Administration estimated a relatively moderate inventory build in crude all and also reported sizeable increases in fuels for the first week of 2024.
In crude, the EIA reported an increase of 1.3 million barrels.
At 432.4 million barrels, inventories are about 2% below the five-year average for this time of the year. The weekly change compared with a decline of 5.5 million barrels for the last week of 2023.
A day before the EIA report was released, the American Petroleum Institute estimated a larger than expected decline in inventories, prompting a gain for oil prices. The effect was reinforced by the EIA’s latest Short-Term Energy Outlook that projected oil demand will exceed supply by 120,000 bpd this year.
In fuels, meanwhile, the authority reported inventory builds for the first week of January.
In gasoline, the EIA estimated an inventory increase of 8 million barrels, which compared with a massive build of 10.9 million barrels for the final week of 2023.
Gasoline production averaged 9.7 million barrels in the first week of January, which compared with 8.8 million bpd for the previous week.
In middle distillates, the EIA estimated an inventory build of 6.5 million barrels for the first week of the new year. This compared with an increase of 10.1 million barrels for the final week of 2023.
Middle distillate production averaged 5.2 million barrels daily, which compared with 5.1 million barrels daily for the previous week.
Oil prices, meanwhile, remain stuck between oversupply perceptions and Middle Eastern supply disruption risk. Saudi Arabia’s announcement of deeper than expected price cuts for February cargos led to a surge in bearish sentiment but short bets were limited by caution with regard to the situation in the Red Sea.
There, Houthi attacks on ships continue despite the ramped-up military presence of U.S. and UK forces. In the latest update from the region U.S. Central Command said it and UK forces had shot down more than 20 drones and missiles released by the Houthis.
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By Irina Slav for Oilprice.com
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