Oil prices fell today following the Energy Information Administration’s announcement. report Inventories increased by 2.7 million barrels in the week ending April 12.
That compares with the previous week’s hefty 5.8 million barrels of production and an estimated 4 million barrels of production for the week ending April 12, reported by the American Petroleum Institute on Tuesday.
At the same time, the EIA reported a decline in gasoline and middle distillates, but at the time of writing, the direction of oil prices remained unchanged.
For gasoline, authorities estimated stock outflows at 1.2 million barrels for the week ending April 12, compared with a modest 700,000 barrels the previous week.
Gasoline production averaged 9.4 million barrels per day during the reporting period. This was a slight decrease from the previous week.
For middle distillates, officials estimated that inventories would decline by 2.8 million barrels for the week ending April 12. This compared to an increase of 1.7 million barrels the previous week.
Middle distillate production for the same period averaged 4.6 million barrels per week through April 12, about the same as the previous week.
Meanwhile, oil prices extended the decline that began earlier this week on apparent expectations that the risk of serious supply disruptions due to military escalation in the Middle East is fairly limited. API inventory build estimates also contributed to the price increase.
“For now, a short-term decline in oil prices will likely be due to tensions remaining under control and other major oil producers such as Saudi Arabia mitigating the global supply shock,” said IG analyst Yep Jun Long. “This may reflect expectations on the part of some that there is a possibility of intervention.” Said Reuters today.
“Our base case scenario is one where tensions remain contained, avoiding widespread conflict that would disrupt oil supplies,” said Han Zhong Liang, an analyst at Standard Chartered. Said Bloomberg suggested that the risk of price spikes appears to be limited for the time being, contributing to the decline in prices.
As of this writing, Brent crude oil is trading at $89.10 per barrel and West Texas Intermediate is trading at $84.55 per barrel, both down from the start.
Written by Irina Slav for Oilprice.com
