Energy
Crude Oil Price Ticks Higher of Smaller-Than-Expected Inventory Increase
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The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 3.5 million barrels last week, maintaining a total U.S. commercial crude inventory of 507.6 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years.
Tuesday evening, the American Petroleum Institute (API) reported that crude inventories rose by a whopping 7.1 million barrels in the week ending February 19. For the same period, analysts had estimated an increase of 3.2 million barrels in crude inventories.
Total gasoline inventories decreased by 2.2 million barrels last week, according to the EIA, but remain well above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged about 9.1 million barrels a day for the past four weeks, up by 5.2% compared with the same period a year ago.
Crude oil prices have now fallen from near $34 a barrel at one point last Thursday to trade at around $30.50 a barrel early Wednesday morning. The decline came as investors and traders came to understand that a so-called production freeze is not the same thing as a production cut. Saudi oil minister Ali al-Naimi made the distinction abundantly clear in remarks Tuesday in Houston:
A freeze is the beginning of a process. If we can get all the major producers to agree not to add additional barrels then this high inventory we have now will probably decline in due time. This is not the same as cutting production. That’s not going to happen.
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