Crude oil prices fell today after the Energy Information Administration reported what can only be described as a colossal crude inventory of 21.6 million barrels for the week to February 26th.
This was in stark contrast to the construction estimated at 7.356 million barrels reported by the American Petroleum Institute and analysts’ expectations of an inventory extraction of 1.85 million barrels. The previous week, the EIA had estimated a crude oil inventory construction of 1.3 million barrels.
Yesterday, the market gave up the API estimate of a gross inventory, due to the massive attraction of gasoline stocks to 9.93 million barrels and the decrease of similar sizes of medium distillate stocks. Both extractions resulted from disruptions in the refinery caused by the Texas frost, which hit the state in February, affecting its oil and gas production and refining operations.
The EIA reported a drop in petrol stocks of 13.6 million barrels in the last week of February and an average production rate of 8.3 million bpd. This compared to virtually unchanged gasoline stocks – at 257.1 million barrels – for the third week of the month and a production rate of 7.7 million bpd.
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For medium distillates, the EIA reported a stock drop of 9.7 million barrels in the last week of February, compared to a drop of 5 million barrels in the previous week. Distillate production averaged 2.9 million bpd last week, up from 3.6 million bpd a week earlier.
Oil prices were highly volatile this week ahead of tomorrow’s OPEC + meeting, as domestic divisions persist and deepen, and traders suspect that voices for increased production could gain the advantage.
India has added fuel to the debate by calling on OPEC + to drop “artificial” production cuts and let prices fall.
“Artificial cuts to keep the price up are not something we support,” an oil and gas ministry told the media earlier this week.
However, oil producers in the Middle East are in desperate need of higher oil prices to reduce deep deficits and return to growth. Even so, they may have to agree on a form of increase in production and turn the struggle for prices into a struggle for market share.
By Irina Slav for Oilprice.com
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