Investing.com – A smaller-than-expected weekly build in U.S. oil stockpiles and supportive gasoline and diesel consumption slowed oil’s selloff today. But crude benchmarks are still set for their biggest monthly loss in more than two years, with no word on how seriously traders are taking looming sanctions on Iran.
The U.S. Energy Information Administration (EIA) said on Wednesday that crude rose by 3.22 million barrels last week for a build of 4.11 million barrels. It was the first time in six weeks that crude stock increases turned out to be less than expected. Nearly 30 million barrels in surplus were accumulated in the five weeks prior.
for the week ended Oct. 26 fell by 3.16 million barrels, the EIA said, higher than expectations for a draw of 2.14 million barrels. , which included diesel and heating oil, was the outlier among products demand, decreasing by 4.05 million barrels vs. forecasts for a drop of 1.37 million.
After a brief period of volatility that factored in the positive effects of a rebound on Wall Street and the negative impact of a rallying dollar, oil prices rose, reacting to the EIA inventory numbers.
By 12:40 PM ET (16:40 GMT), U.S. crude was up 10 cents, or 0.2%, at $66.28 per barrel
U.K. , the international benchmark for oil, rose 24 cents, or 0.4%, to $76.15.
For the month both the crude gauges were set for their biggest loss since July 2016, with WTI set lose almost 10% and Brent 8%.
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More importantly, there was no certainty on how concerned the market was over the U.S. embargo on Iranian oil exports that starts on Sunday. Oil bulls insist that some 1.5 -2.0 million barrels per day (bpd) are at risk under the sanctions, based on Tehran’s peak shipment of 2.5 million bpd in May.
“While the oil market is acting like the impact from the sanctions is (already) priced (in), get ready for the bulls to rise from the grave and scare the sanctions out of the bears,” Phil Flynn of Chicago’s Price Futures Group said.
“November is when the scary part begins. Refiners are coming out of maintenance and will be running at a record pace. Global oil supplies at the same time are going to be squeezed despite promises of more oil from Saudi Arabia,” said Flynn, adding that he expected Riyadh to produce an additional 300,000 bpd at most to compensate for the lost Iranian barrels.
Since President Donald Trump rescinded Iran’s nuclear deal with the West in May and reinstated sanctions on the world’s fourth-largest oil exporter, there have been doubts he could bring its oil sales to zero as he vowed.
Iran’s oil ministry said it has started selling crude oil to private companies in the country for export as part of a strategy to counter the sanctions. Other major importers of Iranian crude such as the EU and India are also looking for ways around the U.S. sanctions.
Refinitiv Eikon data distributed by Reuters on Tuesday showed that cumulative oil production by Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September.
Separately, a on Wednesday showed OPEC pumped 33.31 million bpd in October, up 390,000 bpd from September and the highest by the group since December 2016.
Source: Investing.com
