Largest Weekly Build in Crude Stocks since April

WTI oil price fell this morning after EIA reported that crude oil stocks has increased by 2.5 million barrels, the largest weekly build in crude stocks since April 29, 2016.

The build is a reversal of the 2.5 million barrel draw the week prior. Total inventories still remain at inflated levels for this time of year at 523.6 million barrels, excluding U.S. SPR stocks. WTI slid almost 3.5% in early trading and has rebounded to $46.79 per barrel, a decline of 2.72% at the time of publishing this article.

More Volatility: Oil Price Falls as U.S. Petroleum Stocks Rise

U.S. crude oil production pulled back slightly to 8.55 million barrels per day, after a jump of 152 thousand barrels last week.

More Volatility: Oil Price Falls as U.S. Petroleum Stocks Rise

Total gasoline inventories, a metric that has been followed closely due to a gasoline glut, remained largely unchanged this week. After a fall in gasoline inventories of 2.7 million barrels last week, optimism shone through in the belief that inventories are coming down and the glut would being to vanish.

Gasoline Deliveries Highest on Record: API

API announced this week that gasoline deliveries in July were the highest on record. Total motor gasoline deliveries, a measure of consumer gasoline demand, moved up 2.4% from July 2015, to average nearly 9.7 million barrels per day. Compared with June 2016, total motor gasoline deliveries increased 0.3%. For year-to-date, total motor gasoline deliveries increased 2.5% compared with year-to-date 2015 to a record level just above 9.3 million barrels per day.

“Gasoline deliveries, a measure of consumer demand, hit their highest level on record in July,” said Erica Bowman, API chief economist. “With this indication of increased demand, it’s clear that consumers have continued to benefit from lower gasoline prices at the pump.”

The numbers reported by API don’t always see eye to eye with the EIA, but often the discrepancies are minimal. In this case, the differences are present, but the overall message to the market remains the same, gasoline inventories are shrinking and consumer demand is kicking up. With the focus the gasoline glut has received, this will likely be good news for oil prices moving forward.

According to API, U.S. total petroleum imports in July averaged just below 10.5 million barrels per day, up 6.8% from the prior month and up 9.9% from the prior year, but was the fourth lowest total petroleum imports for the month of July in 19 years, since 1997.

Oil prices were up earlier in the week on rumors of OPEC production cuts coming from meetings scheduled in September and October. Iraq Prime Miniter Haider Al-Abadi countered this news by saying that Iraq is not currently willing to cap production and believes that Iraq should be bringing more crude to market.

The varying rhetoric from OPEC in recent weeks comes amidst wild speculation on the status of the cartel and if new alliances may be forming with unilateral cartels interests waning. Russia has jumped into the mix of these meetings, there has been speculation on where Iran’s loyalties lie, and the largest producers in OPEC (Iraq and Saudi Arabia) continue to increase production to retain market share.

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