The U.S. Energy Information Administration reported a build in commercial crude oil inventories of 6 million, speeding up an oil price decline prompted by a variety of factors, including API’s Wednesday estimate that inventories had risen by a hefty 9.75 million barrels in the week to October 5.
EIA said refineries last week operated at 88.8 percent of capacity, processing 16.2 million bpd of crude and producing 9.7 million bpd of gasoline and 5 million bpd of distillate. This compares with 10 million bpd of gasoline and 5 million bpd of distillate a week earlier.
Gasoline inventories last week added 1 million barrels, compared with a 500,000-bpd fall a week earlier. Distillate inventories declined by 2.7 million barrels, after a 1.8-million-barrel draw a week earlier.
EIA’s data will add to a mix of stock market losses and Hurricane Michael that has passed the oil-producing and refining parts of the Gulf of Mexico and is now making its way north of Florida. More than 40 percent of oil production capacity in the Gulf of Mexico has been shut in, but it will be brought back online quite quickly, analysts believe, curbing any bullish impact on prices.
More bearish news is on the way for West Texas Intermediate, however, after it became clear earlier this week U.S. oil exports to China had slipped down to nothing in August from about US$1 billion worth of crude just two months earlier.
The bullish case for oil remains hinged singularly on the effect U.S. sanctions against Iran, coming into effect on November 4, will have on global supply, while concern is mounting about demand. The IMF earlier this week revised down its outlook for global GDP following a slowdown in emerging economies in the latest indication oil prices are already hurting demand.