United States oil inventories increase as prices slip on profit-taking

Marco Green
March 29, 2018

Last week, the API reported a surprise draw of 2.739 million barrels of USA crude inventories, defying analyst expectations of a build of 3.2 million barrels and demonstrating greater demand and bullish for crude prices in the week ending March 16.

Commercial U.S. crude inventories rose by 1.6 million barrels in the last week to 429.95 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Net U.S. crude imports rose last week by 1.1 million barrels per day. That may suggest future demand for crude oil from refineries ahead of the summer driving season. Only Russia pumps out more, at 11 million bpd. Stocks were also up by 1.8 million barrels at the closely watched futures delivery hub in Cushing, Oklahoma.

The EIA also reported that gasoline inventories fell by 3.5 million barrels in the week to March 23. Gasoline production averaged 10.3 million bpd, compared with 9.9 million bpd a week earlier, and distillate output averaged 4.8 million bpd last week, versus 4.5 million bpd a week earlier.

API had forecast the oil inventories to increase by 1 million barrels for the week.

Oil prices rose on Thursday as the producer cartel OPEC and other suppliers look set to continue withholding output for the rest of the year and potentially into 2019.

Keeping a lid on prices will be concerns over increasing USA production.

Wednesday's price falls came despite Saudi Arabia saying it was working with Russian Federation on a long-term pact that could extend controls over world crude supplies by major exporters for many years.

Crude oil futures tumbled Wednesday after the government confirmed a surprise build in US oil inventories.

Despite high volatility and lingering scepticism about Shanghai's trading hours, along with doubts about the process for physical delivery of crude under contract, most analysts expect the contract to establish itself as a third global oil price benchmark next to Brent and WTI. Brent's first downside target is $66.85.

Other reports by Click Lancashire

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