US Oil Inventory and OPEC send oil prices on Wild Ride – Free Press of Jacksonville
(www.zengernews.com) – Oil prices edged up on Wednesday, with a federal inventory levels report showing lower and a market focus on OPEC news, analysts told Zenger.
Crude oil prices fell nearly 1% in Wednesday’s trading session, but moved closer to neutrality after a formal decision on OPEC + production was announced. West Texas Intermediate, the US benchmark for oil prices, traded between $ 68.55 and $ 69.24, but closed Wednesday at $ 68.59 a barrel, up just 0.13% on the day.
The US Energy Information Administration, which is part of the Department of Energy, also reported a significant loss of 7.2 million barrels in crude oil inventories from the previous week, leaving total commercial inventories of about 6% below the five-year range. Drains are generally indicative of increasing demand, while the reverse is true for constructions.
Tracy Schuhart, energy and commodities analyst at Hedge Fund Telemetry, said the report should have pushed up crude oil prices.
“It’s a great report,” if you’re looking for higher oil prices, she said. But oil prices did not change much on this. They focused more on a meeting of the Organization of the Petroleum Exporting Countries and Their Allies, a group known as OPEC +.
As expected, the group has held firm on production levels, despite calls from US President Joseph R. Biden Jr. and White House staff to increase production.
“We have also made it clear to OPEC – the world’s major oil-exporting countries – that production cuts made during the pandemic should be reversed as a global economy – where the global economy is recovering, in order to lower prices for consumers, ”Biden said Aug. 11.
The first statements by Russia – a key member of OPEC + – that it was considering an increase in production led to sharp swings in the price of oil on Wednesday.
Total product supplied during the four-week period, an indicator of industry demand, increased 17.1% from the same period last year, to 21.4 million barrels per day.
While comparisons to last year are skewed by the pandemic, many analysts believe any level above 20 million barrels per day represents an improvement over pre-pandemic levels.
“A fairly solid report, with sharp declines in oil inventories and a sharp increase in implied demand for oil,” said Giovanni Staunovo, commodities analyst at Swiss investment bank UBS.
The large drain on stocks, however, could reflect preparations for Hurricane Ida, which made landfall in Louisiana as a Category 4 hurricane over the weekend. Several offshore operators had pulled personnel from their production platforms a few days before the storm hit the Gulf of Mexico.
Denton Cinquegrana, chief petroleum analyst with the Petroleum Price Information Service, noted that all crude oil inventories came from PADD 3, an petroleum district covering the states on the Gulf Coast of Alabama, from Arkansas, Louisiana, Mississippi, New Mexico and Texas. .
“I think there is an Ida impact in there,” he said of the inventory data.
Staunova added that the adjustment factors used to rank the federal data may have caused crude oil inventories to decline more than the physical market would show.
However, this was a mixed report for various petroleum products.
Gasoline inventories, for example, have increased by 1.3 million barrels per day and are only 2% below the five-year range for this time of year.
The total gasoline supplied to the market, meanwhile, was on par with the comparable week of 2019, not to account for strains of the pandemic. The decrease may be indicative of the decreasing days of summer, when mobility usually begins to decrease.
Edited by Bryan Wilkes and Alex Willemyns