Oil prices recovered a bit on Wednesday morning after the Energy Information Administration reported an inventory build of 1.2 million barrels for the week to June 12. Fuel inventories, however, fell.
This compared with a 5.7-million-barrel build for the week before that. Analysts had expected the EIA to report a modest build of half a million barrels for the week to June 12. A day earlier, the American Petroleum Institute reported an inventory increase of 3.86 million barrels.
Oil prices have been on the decline over the past couple of days, swung around by fears of a second wave of Covid-19 on the one hand, and expectations that the world’s crude oil oversupply may be starting to inch down. For now, the bearish factors seem to have the upper hand.
The EIA’s report may, however, change the sentiment: the authority also reported a gasoline decline of 1.7 million barrels for the week to June 12, after it estimated a weekly build of 900,000 barrels for the previous week. Gasoline production increased last week, at 8.4 million bpd. This compared with 8.1 million bpd a week earlier.
In distillate fuels, the EIA estimated a 1.4-million-barrel draw in inventories for last week, after a 1.6-million-barrel build the previous week. Distillate fuel production averaged 4.5 million bpd, down on a week earlier.
Distillate fuel stockpiles have been rising steadily and strongly over the past few weeks in the U.S. as demand for different oil products recovered unevenly after lockdowns began to be lifted.
Reuters’ John Kemp wrote in a weekly column that the surplus came from the discrepancy between gasoline demand, which was recovering quickly, and jet fuel demand, which was lagging far behind. As a result, Kemp explained, middle distillates that would have normally been used to make jet fuel were used to make diesel fuel instead. Diesel demand has also been slow to recover.
Refinery runs last week averaged 13.6 million bpd, up slightly on the previous week.
By Irina Slav for Oilprice.com