Crude oil prices fell today after the Energy Information Administration (EIA) reported a build of 800,000 barrels in crude inventories for the week ending September 6.
This contrasts with the previous week’s draw of 6.9 million barrels, which failed to boost prices due to prevailing pessimism about demand. The American Petroleum Institute had estimated a reduction of 2.79 million barrels in oil inventories for the same week.
The EIA also reported increases in fuel inventories. For gasoline, there was a build of 2.3 million barrels, with production averaging 9.4 million barrels per day. This is up from an 800,000-barrel build the previous week, during which production averaged 9.7 million barrels per day.
In middle distillates, the EIA estimated an increase of 2.3 million barrels in inventories, with production averaging 5.2 million barrels per day. This compares to a modest decline of 400,000 barrels the prior week, with production also at an average of 5.2 million barrels per day.
Earlier in the week, demand concerns were heightened after OPEC revised its demand growth projections for the year, reducing the forecast to 2.03 million barrels per day from 2.11 million barrels per day, and for next year to 1.74 million barrels per day from 1.78 million barrels per day.
However, oil prices saw some recovery today, driven by expectations of disruptions in the Gulf of Mexico as tropical storm Francine intensified into a hurricane, with forecasts predicting landfall in Louisiana later in the day. The Bureau of Safety and Environmental Enforcement reported that a quarter of the Gulf’s oil production capacity has been shut down, and Exxon is reportedly cutting production at its Baton Rouge refinery to 20% of its capacity in preparation for the storm.