Crude oil prices dipped shortly before the EIA reported its crude inventory report today, but saw a small jump after the release, when the agency reported crude inventories added 5.5 million of barrels per week until August 5.
A week earlier, inventories added 4.5 million barrels, according to the EIA, adding to downward pressure on prices.
In fuels, the picture was mixed.
Gasoline inventories fell by 5 million barrels in the week to August 5, compared with a modest increase of 200,000 barrels the previous week.
Gasoline production rose, averaging 10.2 million barrels a day last week, compared with 9.3 million barrels a day the previous week.
In middle distillates, which have fallen to critical levels this year, the EIA estimated an inventory build of 2.2 million barrels for the week to August 5. That compared to a draw of 2.4 million barrels the previous week.
Middle distillate production averaged 5.1 million bpd last week, compared with 4.9 million bpd the previous week.
US distillate inventories have fallen to dangerously low levels and from that point on, Reuters’ John Kemp wrote last week, “either a looming recession cuts consumption or prices are likely to rise.”
Nor is it a very palpable choice for the Biden administration, which has boasted about the steady decline in recent weeks. According to EIA data cited by Kemp, distillate fuels have declined in 66 of the past 109 weeks with the cumulative draw since July 2020 at 65 million barrels.
Against this backdrop, signs are emerging that US manufacturing activity could be set for a decline in the second half of this year, after peaking in the second quarter, according to Reuters market analyst .
Meanwhile, refineries continued to operate at high operating rates, averaging 94.3 percent of capacity last week. Refineries process an average of 16.6 million barrels of crude oil per day. That compares with 15.9 million bpd the previous week, with capacity utilization at 91 percent.
By Irina Slav for Oilprice.com
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