The Energy Information Administration reported today a crude oil inventory draw of 4.9 million barrels for the week to November 29, after a 1.6-million-barrel increase reported for the previous week.
Analysts had expected an inventory decline of 1.798 million barrels and the American Petroleum Institute yesterday estimated inventories had gone down by 3.72 million barrels, which pushed oil prices higher.
In gasoline, the EIA reported an inventory increase of 3.4 million barrels for the week to November 27, down from a build of 5.1 million barrels reported for the previous week. Gasoline production averaged 9.9 million bpd.
In distillate fuels, the authority estimated a 3.1-million-barrel inventory increase, compared with a build of 700,000 barrels for the previous week. Production last week averaged 5.3 million bpd.
Refineries in the United States processed 16.8 million bpd last week, up from 16.2 million bpd a week earlier. Imports averaged 6 million bpd, down from 6.2 million bpd a week earlier.
While oil prices rebounded on the surprising news from the API, whose weekly inventory surprises have lately been more on the negative side, there is a major downward risk for them: the OPEC and OPEC+ meetings. Related: Will The OPEC Meeting Yield A Bullish Surprise?
OPEC is meeting on Thursday to discuss how to handle the production cuts going forward and then, a day later, it is meeting with Russia and its other partners. As usual, Russia’s Alexander Novak is keeping his cards close to his chest, although the dominant expectation is that Moscow will continue to play along with OPEC.
There is, however, room for doubt. Reports from OPEC say Saudi Arabia wants to deepen the cuts, and this might not be something Russia would be too happy to do. What’s more, even if it agrees to deeper cuts this will not automatically mean it will implement it. Like some OPEC members, Russia has not been particularly strict about staying within its OPEC+ assigned quota. In fact, it has been exceeding this quota for most of the year.
As a result, there is the possibility that no deeper cuts will be agreed. This, according to Rystad Energy, could pressure prices to $40 a barrel as it would lead to a sizeable supply surplus in 2020.
By Irina Slav for Oilprice.com
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