Oil Prices Surge Despite Bearish Inventory Data

Oil Prices Surge Despite Bearish Inventory Data

10 Jan 2019

Oil prices surged higher on Wednesday and continue to remain buoyed on Thursday. The driver was Saudi Arabia’s pledge to cut exports by 800K barrels per day in an effort to push oil back to $80 per barrels. This comes despite a large than expected build in petroleum inventories reported by the Department of Energy on Wednesday. Production in the US remains at an all time high unchanged week over week at 11.7 million barrels per day.

Inventories Rose More than Expected

The EIA reported that crude oil inventories decreased by 1.7 million barrels from the previous week, which was in line with expectations. Crude oil inventories are about 8% above the five-year average for this time of year. Gasoline inventories increased by 8.1 million barrels last week, compared to expectations of a 3-million barrel rise and are about 5% above the five year average for this time of year.

Distillate fuel inventories increased by 10.6 million barrels last week and are about 5% below the five-year average for this time of year. Expectations were for a 2.5-million barrels rise. Total petroleum inventories increased last week by 13.3 million barrels last week.

Demand Eases

Total demand during the past month was 20.5 million barrels per day, down by 0.7% year over year. Gasoline demand averaged 9.0 million barrels per day, down by 1.2% year over year. Distillate fuel demand averaged 3.8 million barrels per day during the last month, down by 1.3% from the same period last year.

The EIA reports that crude oil refinery inputs averaged 17.6 million barrels per day during the week ending January 4, 2019, which was 194,000 barrels per day less than the previous week’s average. Refineries operated at 96.1% of their operable capacity last week, which is more than normal.

Crude oil imports averaged 7.8 million barrels per day last week, up by 454,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.6 million barrels per day, 3.6% less than the same four-week period last year.

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