Crude oil prices experienced a decline today after the U.S. Energy Information Administration (EIA) released its report on estimated inventory levels. According to the EIA, there was an increase of 4.2 million barrels in crude oil inventories for the week ending February 23. This is higher than the previous week’s build of 3.5 million barrels, which was accompanied by declines in gasoline and middle distillate inventories.
In terms of gasoline, the EIA reported a draw of 2.8 million barrels for the week ending February 23. Gasoline production averaged 9.4 million barrels per day (bpd) during that week. This draw is in contrast to the previous week’s decline of 300,000 barrels, when production averaged 9 million bpd. As for middle distillates, the EIA reported a decline of 500,000 barrels in inventories for the week ending February 23, with production averaging 4.3 million barrels per day. This is compared to the prior week’s draw of 4 million barrels, when production averaged 4.2 million bpd.
Despite the decline in crude oil prices, there was some positive news for the market. Reports emerged on Tuesday that OPEC+ would extend its production cuts until the end of the year. This move, while expected, could provide some support to oil prices. OPEC+ members collectively agreed to cut 2.2 million bpd from their production this quarter, with a significant portion of that already in effect due to Saudi Arabia’s voluntary cut of 1 million bpd, which began in mid-2023.
However, on the same day, the American Petroleum Institute (API) released its own report on estimated oil inventories for the week ending February 23, which offset the positive effect of the expected OPEC+ cuts. The API reported a substantial build of 8.43 million barrels, contrary to expectations of a draw. This unexpected increase in inventories is likely to reverse the direction of oil prices, as the market remains highly sensitive to U.S. crude oil inventory updates.
As of the time of writing, Brent crude was trading at $84.15 per barrel, while West Texas Intermediate was priced at $79.31 per barrel, both showing an increase from the opening prices.
In conclusion, the EIA’s report on crude oil inventories, along with the API’s unexpected build, have led to a decline in oil prices. However, the potential extension of OPEC+ production cuts could provide some support to prices in the future. The market will continue to closely monitor U.S. crude oil inventory updates for further insights into price movements.