Weekly growth in US crude stockpiles came in above estimates for a third time in a row, according to data from the Energy Information Administration on Thursday
WASHINGTON (Pakistan Point News / Sputnik - 14th October, 2021) Weekly growth in US crude stockpiles came in above estimates for a third time in a row, according to data from the Energy Information Administration on Thursday.
Crude stockpiles rose by 6.09 million barrels in the week to October 8, following through with the 2.35-million and 4.58-million builds in the previous two weeks, the EIA said in its Weekly Petroleum Status Report.
The data defied the narrative of ever-tightening supplies in the marketplace from global output cuts and higher demand due to increased activity.
Analysts polled by US media had anticipated an increase of 1.1 million barrels for the just-ended week.
"This is definitely bearish but the market is so hyped up over winter demand projections that it's having no impact whatsoever on immediate crude prices," John Kilduff, founding partner at New York energy hedge fund Again Capital, said.
The US crude benchmark, West Texas Intermediate (WTI), was up 42 cents, or 0.5%, at $80.84 per barrel by 12:45 p.m. EST (16:45 GMT). WTI hit seven-year highs above $82 on Monday. The US crude gauge has gained 66% this year from a combination of output cuts by the Organization of the Petroleum Exporting Countries and its allies, a 23-nation alliance known as OPEC+.
Higher economic activity amid a sheer drop in global caseloads of coronavirus infections have also helped oil consumption to spike in recent weeks as more motorists took to the roads and activity curtailed for months by the novel coronavirus pandemic loosened up.
That higher energy usage showed up in the weekly inventory dataset released by the EIA on Thursday. Gasoline stockpiles fell by 1.96 million barrels last week versus forecasts for a build of 3.26 million while inventories of distillates slipped by 24,000 barrels against expectations for a 396,000-barrel decline.
Kidluff said crude builds have been larger, probably because refining activity was lagging usual trends due to the higher WTI prices now and despite the continuous drops in gasoline and distillate inventories.
"This might surprise some people but crude refiners are also price-sensitive and WTI at seven-year highs aren't exactly the levels many want to buy at," he said, adding that refinery runs for last week were at 86.7%, well below the 90% and above typical for this time of year.
The International Energy Agency also boosted market sentiment on Thursday by upgrading demand expectations for 2022 to 99.6 million bpd, up 3.3 million.
The Paris-based agency also said that the energy crisis had forced a shift to oil, which might increase demand for crude by 500,000 bpd.
A lack of natural gas, liquefied natural gas and coal could keep the oil market in deficit until at least the end of 2021, the agency added.
On the flip side, Russia's Deputy Prime Minister Alexander Novak said on Thursday that Moscow had no issues ramping up oil production to meet projected demand.
That could be in conflict with the latest decision by OPEC+ not to add beyond the monthly 400,000 bpd rise the group had agreed to. OPEC+ has Russia as the second biggest producer after Saudi Arabia.
