West Texas Intermediate (WTI) oil prices hovered just above $70 today following the U.S. Energy Information Administration‘s (EIA) announcement of a 4.6 million-barrel draw in crude oil inventory for the week ending December 1.
While the crude draw was notable, a substantial increase in gasoline inventory and a smaller one in distillates partially offset the positive development. This followed a reported estimated inventory build of 1.6 million barrels in the previous week.
The American Petroleum Institute (API) had, a day before the EIA release, presented its own estimates, indicating an inventory build in crude oil and fuels during the same period. These API findings contributed to a decrease in oil prices.
According to the EIA, fuels experienced inventory increases in the last week. Gasoline saw an estimated build of 5.4 million barrels, compared to 1.8 million barrels in the prior week. Gasoline production for the week to December 1 averaged 9.5 million barrels per day (bpd), up from 9.3 million bpd in the previous week.
In middle distillates, the EIA reported an inventory build of 1.3 million barrels for the week to December 1, in contrast to a substantial 5.2 million barrels increase in the previous week. Middle distillates production averaged 5.1 million bpd last week, compared to 5 million bpd the week before.
Despite the fluctuating inventory data, oil prices are caught in a tug of war between bullish and bearish sentiments. Recent OPEC+ production cuts and uncertainties surrounding Chinese energy demand growth add complexity to the market dynamics.
Analysts hold varying perspectives on the situation. DBS Bank analyst Suvro Sarkar expressed pessimism, stating, “The only positive news over the last couple of days has been Saudi and Russian officials stating that the OPEC+ cuts could be extended or deepened depending on market situations prevailing.”
Conversely, Vandana Hari from Vanda Insights argued that the commodity is oversold, telling Bloomberg, “Crude has been oversold. It’s hard to imagine it’s still reeling from the shock of the OPEC+ decision.”
WTI front-month futures currently trade nearly 15% lower than 30 days ago, with minimal change following the EIA inventory report release.