EIA Release Shows Decline in Crude Inventories

The EIA released data showing that US Crude inventories fell by 600,000 barrels last week to stand at 510.8 million barrels, the Energy Information Administration further added that the crude inventories in spite of the decline is still at an unconventionally high level. This deduction adds more weight to the fears that the current over supply in crude is still very much around especially in the short term. This comes on the trail of estimations made yesterday by the American Petroleum Institute stating that oil inventories had grown by about 1.4 million barrels, just a week after anticipation for a rebound in crude prices by posting a 14.5 million barrel decline.

U.S. crude imports recovered last week, rising 1.1 million barrels per day after plummeting 1.7 million bpd the previous week to a record low. Gulf Coast crude stocks jumped 2.3 million barrels. The price of oil was driven lower by the notable increase in imports and hike in stocks of distillate products, traders said.

"So the million-dollar question is really a 14.5 million barrel question...as in where did all those barrels go to? The market was expecting some sort of a 'make up call' after last week's storm affected mega-draw," said David Thompson, executive vice president at commodities-focused broker Powerhouse in Washington.

Crude futures, which had been drifting lower prior to the news, briefly surged before resuming their decline. U.S. crude fell nearly 2 percent to $44.07 a barrel, touching a one-week low. Brent crude lost 1.8 percent at $46.26 a barrel.

The EIA data which now contradicts the figures released by the API yesterday, who had earlier anticipated a more positive outcome than most market analysts had expected. An increase of 4 million barrels was posted by the API yesterday and like every report that have come from the EIA and the API, the market which is already brimming with volatility reeled from the shock. The EIA figures is currently expected to dampen the volatile market atmosphere as the build remains in the 6 figure range which is quite positive with the current crude oil situation.

In the week ending on September 9, the EIA reports that Gasoline inventories were 600,000 barrels higher, after previously reporting a 4.2 million barrel slump in the week before, as it remains above the usual levels for this time of the year. Distillate fuel inventories, however, recorded a more substantial increase, of 4.6 million barrels, after rising by 3.4 million barrels in the week before.

Refineries processed a daily average of over 16.7 million barrels in the week to September 9, down from almost 17 million barrels in the prior week. This constituted a 200,000-bpd decline on the previous week, with operation at 92.9 percent of capacity in the seven days to September 9.

Gasoline output was down palpably to 9.9 million bpd in the seven days to September 9, from 10.2 million bpd in the week before, signaling an expected reduction in fuel supply following Labor Day. During the day, WTI Crude was seen trading at US$45.02 per barrel, and Brent crude was at US$47.19 per barrel.