© Reuters.
(updates with settlement prices)
By Barani Krishnan
Investing.com – Oil prices fell for the first time in five sessions on Wednesday after a second straight big build in weekly stockpiles of U.S. crude suggested the market wasn’t as undersupplied as bulls in the trade were trying to portray.
The Energy Information Administration, which reported the numbers, also raised for a second week in a row its estimates on U.S. crude production that also weighed on sentiment in an industry that had almost written off more output from local drillers.
U.S. crude’s West Texas Intermediate benchmark settled down $1.50, or 1.9%, at $77.43 per barrel. WTI fell to a low of $76.86 earlier on Wednesday, after reaching a seven-year high of $79.47 the previous day. Despite the decline, the U.S. crude benchmark was still up almost 60% on the year.
London-traded Brent crude, the global benchmark for oil, finished the session down $1.48, or 1.8%, at $81.08. Brent spiked to $83.11 on Tuesday and is up 56% on the year.
Crude stockpiles rose by 2.35 million barrels in the week to October 1, following through with the 4.58-million build in the previous week to September 24, the EIA said in its Weekly Petroleum Status Report.
Inventories rose in the past fortnight as oil production in the U.S. Gulf Coast of Mexico returned to near-normal levels after the extended effects of Hurricane Ida that struck at end-August.
Analysts tracked by Investing.com had forecast a crude draw of 418,000 barrels instead for the just-ended week.
Prior to the past two weeks, crude stockpiles fell by around 10 million barrels over a three-week span after Ida disrupted crude production on the US Gulf Coast of Mexico, forcing refiners to draw strongly from inventories.
The hurricane initially shut down more than 90% of oil and gas production facilities on the Gulf prior to its Aug 29 landfall. As late as September 23, some 16.2% of production in the Gulf remained inaccessible to refiners.
“The hangover from Ida is finally over,” John Kilduff, founding partner at New York energy hedge fund Again Capital, said. “We could see consistent crude builds from here based on normal fall-season trends, though we should also note that nothing in this market is ‘normal’ anymore.”
Aside from the crude build it reported, the EIA also raised its production estimates for U.S. crude to 11.3 million barrels per day for the week to October 1 from a previous 11.1 million daily.
It was the second straight week of higher adjustments to crude production made by the agency, which raised output estimates by 500,000 barrels per day in the previous week.
Refinery utilization, meanwhile, stood at 89.6%, not too far from the 90%-92% level common for this time of year.
Crude stockpiles weren’t the only estimates that analysts missed in their forecasts.
The EIA said gasoline inventories rose by 3.26 million barrels during the week to October 1, versus the forecast build of 400,000 barrels. In the previous week, stockpiles of the motor fuel rose by 3.48 million.
Inventories of distillates, which include diesel and heating oil, fell by 396,000 barrels in the latest week against an expected deficit of 750,000, data showed.
Source: Investing.com
