The Energy Information Administration tipped markets towards bear territory when it reportedthat U.S. crude oil inventories had jumped by 4.9 million barrels in the week to October 7. The total of 474 million barrels remains higher than the average for this time of year.
Yesterday, the American Petroleum Institute was the first to spread oil doom and gloom by estimating that crude inventories had gone up by 2.7 million barrels in the same week. This immediately weighed on international oil prices, as it came amid a temporary pause to the news flow about OPEC and Russia’s freeze plans. It also suggested that inventories may be building for the first time in the last six weeks.
Analysts polled by media had expected an increase of 2 million barrels in crude oil stockpiles, along with a 900,000-barrel decline in gasoline inventories. Last week, the EIA reported a 3-million-barrel draw after API estimated a draw of 7.6 million barrels the day prior.
According to the EIA, gasoline inventories last week fell by 1.9 million barrels, with refineries producing an average 9.9 million barrels a day. The rate of crude oil processing stood at 15.6 million barrels, down 480,000 bpd from the previous week, with the facilities operating at 85.5 percent of available capacity.
The EIA’s latest report will push downward already volatile international prices, especially after the excitement started to wane about Russia joining the OPEC freeze after temporarily pushing Brent above US$53 a barrel.
Markets are more than likely to remain excessively volatile until the end of November, when OPEC will meet to make a final decision on the output cap.
At the time of writing, Brent crude was trading down 1.29% at US$51.14 a barrel, while West Texas Intermediate traded down 1.3% at US$49.53 a barrel.