Oil prices initially rose on a smaller-than-expected US producer price increase and the API’s report of declining crude oil inventories.
Optimism faded after the EIA reported an inventory build, causing prices to fall.
Geopolitical tensions in the Middle East continue to provide some support for oil prices, but are countered by concerns about slowing global oil demand.
Oil prices moved lower today, after the U.S. Energy Information Administration reported an inventory build, countering API’s weekly estimate for oil stocks.
The EIA saw oil inventories add 1.4 million barrels in the week to August 9, which compared with a decline of 3.7 million barrels for the previous week. The API, a day earlier, estimated a 5.2-million-barrel decline in crude oil inventories for the week to August 9.
In fuels, the EIA estimated negative inventory changes for the reporting period.
Gasoline stocks fell by 2.9 million barrels in the week to August 2, with production averaging 9.7 million barrels daily.
This compared with an inventory increase of 1.3 million barrels for the previous week, which pressured prices at the time, with production averaging 10 million barrels daily.
In middle distillates, the EIA estimated an inventory draw of 1.7 million barrels for the week to August 9, with production at 4.8 million barrels daily.
The figures compared with an inventory build of 900,000 barrels for the previous week, when production averaged 5 million barrels daily.
Crude oil prices, meanwhile, were trending higher earlier in the day following the API’s inventory report and a smaller-than-expected rise in producer prices in the U.S. in July that reinforced expectations of a rate cut. Later in the day, prices dipped.
The possibility of a larger war in the Middle East also continued to support the benchmarks as the U.S. deployed a submarine and several warships to the region to help prop up Israel’s defenses.
Right now, prices seem stuck between the war premium and the oil demand outlook of the IEA and OPEC, with the latter revising its demand growth forecast for 2024 lower earlier this week. This was taken as acknowledgment that oil demand is rising slower than before.
At the time of writing, Brent crude was trading at $80.59 per barrel and West Texas Intermediate was changing hands at $78.14 per barrel, both down from opening.
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