Oil Falls After EIA Confirms Large Crude Inventory Build

July 8, 2020//-Crude oil inventories in the United States swelled by 5.7 million barrels in the week to July 3, the Energy Information Administration reported, but gasoline inventories drew down.

Analysts had expected an inventory decline of 3.114 million barrels for crude oil in the period, while the American Petroleum Institute reported a crude build the day prior, to the tune of 2.048 million barrels.

In the week prior, the EIA had reported a significant inventory draw of 7.2 million barrels, while analysts had only anticipated a drawdown of less than a million barrels—highlighting the low degree of accuracy in recent weeks of analyst predictions.

Oil inventories remain above the five-year average for this time of the year, with refinery runs averaging 14.3 million bpd, compared with 14 million bpd a week earlier, and 13.8 million bpd two weeks earlier.

Gasoline production averaged 9.0 million bpd in the week to July 3, up from 8.9 million bpd a week earlier. Gasoline inventories shrunk by a sizable 4.8 million barrels last week, after a weekly build of 1.2 million barrels for the week to June 26. This week’s figures suggest that demand for gasoline is continuing to recover, although inventories are still above the five-year average.

Distillate fuel production averaged 4.8 million bpd last week, versus 4.6 million bpd a week earlier. Distillate fuel inventories grew by 3.1 million barrels in the week to July 3.

Oil price increases have been limited over the last week, bolstered by OPEC’s strong showing with the production cuts and the falling number of daily deaths attributable to the coronavirus in the United States, but pressured by the rising number of new coronavirus cases, which could eat into any oil demand recovery that we are just now starting to see.

The WTI benchmark was trading up on Wednesday morning prior to the data release at $40.71 a barrel at 9 am EDT. Brent crude was trading at $43.25 per barrel.