EIA today reported a 2.8-million-barrel draw in U.S. crude oil inventories for the week to October 6, lifting market spirits further amid higher oil demand growth projections from OPEC and growing Middle East tensions around Kurdistan. Analysts had forecast a draw of 400,000 barrels.
EIA’s report could reinforce oil price optimism, especially now that oilfield operators in the Gulf of Mexico are returning to normal operation after shutting down 92 percent of production capacity because of Hurricane Nate. That production capacity cut had played a role in oil’s latest price rise and now that it’s gone, upward price movements could become more tentative.
On the other hand, OPEC said in its latest Monthly Oil Market Report it had revised upwards its 2017 oil demand growth forecast by 30,000 bpd to 1.5 million bpd, which also helped to strengthen prices despite the cartel also reporting an increase in its September oil production to 32.75 million barrels – 25,000 bpd above the quota OEPC agreed to last November.
However, the EIA also reported a 2.5-million-barrel rise in gasoline inventories for last week, exceeding analyst expectations of a 1.4-million-barrel increase, and in contrast to API estimates of a 1.575-million-barrel draw. Refineries, according to the EIA, produced over 10 million barrels daily of the fuel last week, versus 9.9 million bpd in the week before.
Increases in gasoline inventories at this time of the year are to be expected, as the general mood after the end of summer driving season is traditionally pessimistic when it comes to fuel demand. Usually, the last three months of the year are a weak time for oil prices, especially now that crude oil is not so widely used for heating purposes.
At the time of writing, WTI was trading at US$50.32 a barrel and Brent crude was at US$56.17 a barrel.
By Irina Slav for Oilprice.com
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