The Energy Information Administration reported a crude oil inventory draw of 1.7 million barrels for the first week of 2019, after a 6.9-million-barrel build in the last week of 2018. Inventories remain over the five-year seasonal average, the authority said.
In gasoline, however, the EIA reported a hefty addition of 8.1 million barrels, a day after the American Petroleum Institute depressed oil prices further by estimating a 5.5-million-barrel increase in gasoline inventories and a 10.2-million-barrel build in distillate fuel inventories. According to the EIA, distillate fuel inventories went up by as much as 10.6 million barrels in the week to January 4.
West Texas Intermediate recovered to above US$50 a barrel this week on the news—as announced by President Trump on Twitter—that U.S.-China trade talks were going well, which sparked hope an end was in sight for the trade war that has weighed on international oil prices.
The bilateral talks have gone into their third day today, which was unscheduled, but signs continue to be positive: Reuters quoted U.S. officials as saying the negotiations currently concerned increased Chinese imports of U.S. farm produce and energy commodities. However, Beijing has said it will not make “unreasonable concessions” adding it expected to not be the only side making compromises.
If, however, the sides fail to reach an agreement by March 2, the U.S. will effect a 15-percent increase in tariffs currently of 10 percent on Chinese goods worth US$2 billion. The impact of this move on oil prices would undoubtedly be devastating.
Amid this return of optimism, the EIA reported refineries in the United States had processed an average of 17.6 million barrels daily of crude last week, producing 9.4 million bpd of gasoline and 5.6 bpd of distillate fuels. This compares with daily gasoline production of 9.5 million bpd and distillate fuel production of 5.6 million bpd.
At the time of writing, Brent crude traded at US$60.35 a barrel, up by 2.78 percent from yesterday’s close, with West Texas Intermediate changing hands for US$51.37 a barrel, up 3.19 percent on Tuesday.
By Irina Slav for Oilprice.com
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