Crude oil prices fell today after the Energy Information Administration reported what can only be described as a colossal crude oil inventory of 21.6 million barrels for the week to February 26th.
This contrasts with the estimated construction of 7.356 billion barrels reported by the American Petroleum Institute and analysts ’expectations of an inventory of 1.85 million barrels. The previous week, the EIA had estimated a crude oil inventory of 1.3 million barrels.
The market abandoned yesterday the API estimate on the construction of a crude oil inventory thanks to a massive capture of gasoline stocks, 9.93 million barrels and a similar decrease in distillate stocks means. Both draws resulted from refinery disruptions caused by the Texas freeze, which affected the state in February, hampering its oil and gas production and refining operations.
The EIA reported a 13.6 million barrel drop in gasoline stocks during the last week of February, and an average production rate of 8.3 million barrels per day. This compares with virtually unchanged gasoline stocks (257.1 million barrels) during the third week of the month and a production rate of 7.7 million barrels per day.
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For medium distillates, the EIA reported a 9.7 million barrel inventory drop during the last week of February, compared to a 5 million barrel drop the previous week. Distillate production averaged 2.9 million bpd last week, compared to 3.6 million bpd the previous week.
Oil prices have been extra-volatile this week ahead of tomorrow’s OPEC + meeting as domestic divisions persist and deepen and traders suspect that voices of production increases could be won.
India has added fuel to the debate by calling on OPEC + to remove “artificial” cuts in production and drop prices.
“Artificial cuts to keep the price up are not something we admit,” an oil and natural gas ministry told the media earlier this week.
However, Middle East oil producers desperately need higher oil prices to reduce deficits and return to growth. However, they may have to consent to increase some form of production and turn the struggle for prices into a struggle for market share.
By Irina Slav for Oilprice.com
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