Crude oil prices extended their decline today after the Energy Information Administration reported a crude oil inventory build of 1.1 million barrels.
This compares with a 6.9-million-barrel draw a week earlier, which strengthened oil’s rally spurred by plans by OPEC to extend its production cuts.
The rally received a major boost earlier this week after drone and cruise missile attacks on Saudi oil infrastructure, which took some 5.7 million bpd of production offline. However, this rally didn’t last: as soon as Energy Minister Abdulaziz bin Salman told media oil production will return to pre-attack levels by the end of the month, both Brent and WTI slumped back.
EIA’s report is unlikely to change that. Besides the build in crude oil stocks, the authority also reported an estimated 800,000-barrel increase in gasoline stockpiles and a 400,000-barrel rise in distillate fuel inventories.
This compares with a 700,000-barrel gasoline inventory draw a week earlier, countered by a 2.7-million-barrel increase in distillate fuel inventories in the first week of September.
In production, the EIA reported a daily processing rate of 16.7 million barrels for U.S. refineries during the second week of September, with gasoline output at 9.5 million bpd and distillate fuel production at 5.1 million barrels. This compares with 10.4 million bpd of gasoline and 5.3 million bpd of distillate fuel for the first week of September.
Production, meanwhile, continued to grow. In its latest Drilling Productivity Report, the EIA said it expected shale oil production to hit 8.84 million bpd in October, up from 8.77 million bpd this month. The biggest change, the authority said, is to be recorded in the Permian, which is hardly a surprise. Production there should rise by 71,000 bpd between this month and next.
At the time of writing, Brent crude was trading at $62.92 a barrel, with West Texas Intermediate at $58.46 a barrel.