Huge inventory ends oil price rally

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A week after reporting the largest accumulation of oil stocks since 2016, the EIA again has bad news for oil bulls: stocks added 15.2 million barrels during the week to April 3 , said the authority.

This compares to a construction of 13.8 million barrels for the previous week and analysts’ expectations of a construction of 10.13 million barrels. A day earlier, the API estimated that stocks had added 11.94 million barrels in the first week of April.

The EIA also reported that gasoline inventories had increased by 10.5 million barrels and that distilled fuel inventories had added 476,000 barrels. This compares to a 7.5 million barrel increase in gasoline stocks the previous week and a 2.2 million barrel drop in distilled fuel inventory.

One day before the EIA published its weekly oil report, it published its latest short-term energy outlook, in which the authority forecasts a substantial drop in fuel demand in the first half of the year with the coup harder to come in the current quarter. . The EIA said it expects gasoline consumption alone will drop 1.7 million bpd this quarter to 7.1 million bpd. However, in the second half of the year, gasoline consumption should rise to 8.9 million bpd.

Refineries handled 13.6 million bpd of crude last week, the EIA also said in its weekly report, which compared to 14.9 million bpd a week earlier as the first signs decline in demand became visible. Gasoline production last week averaged 5.8 million bpd, with distillate production of 5 million bpd. This compared to a daily average of 7.5 million barrels per day for gasoline and 5 million barrels per day for fuels distilled the previous week.

Despite the grim weekly API update on inventories and the EIA report today, oil prices could continue to rise for at least another day. OPEC and its partners in the production cuts are expected to meet tomorrow to decide on a much deeper cut that will also involve other producers such as Canada and Norway.

However, the deal appears to depend on U.S. participation in the cuts, which adds an element of uncertainty to the conclusion of a deal, as Washington has signaled a clear reluctance to impose production cuts on U.S. oil companies .

By Irina Slav for Oilprice.com

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