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The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.<doc-sep>After reporting a 2.6-million-barrel inventory draw last week, the Energy Information administration this week had more good news for oil bulls, estimating that crude oil inventories to have gone down by 4.3 million barrels in the week to August 31. Yesterday, the American Petroleum Institute reported an estimated 1.17-million-barrel draw in inventories, while analysts polled by IG Group expected an even more moderate draw, of 880,000 barrels. A Reuters analyst poll anticipated a bigger draw of 1.9 million barrels. The EIA also reported a 1.8-million-barrel increase in gasoline inventories and a 3.1-million-barrel build in distillate inventories. These numbers compare with a draw of 1.6 million barrels in gasoline inventories a week earlier and an 800,000-barrel build in distillate inventories. Refineries processed 17.6 million barrels of crude daily last week, churning out 10.2 million barrels of gasoline and 5.4 million barrels of distillate daily. Imports averaged 7.7 million bpd in the week to August 31, while production likely stayed at record highs of 11 million bpd. At the time of writing, West Texas Intermediate was trading at US$68.48 a barrel and Brent was at US$77.38 a barrel. EIA’s figures, like API’s yesterday, are unlikely to have a deep impact on prices, outshined by other factors, chief among them the possibility of a further escalation in the U.S.-China trade spat. Today marks the end of the public comment period for another round of tariffs on US$200 billion worth of Chinese products. As soon as it is implemented, China is expected to retaliate. Another headwind for prices is the ripple effect from Turkey’s currency crisis, which could dampen demand for crude oil. For now, this is only another cause for concern rather than a reality, but it does look like demand-side risks are multiplying, despite the upbeat mood demonstrated this week by OPEC’s Mohammed Barkindo, who said global oil demand would hit the 100-million-bpd mark sooner than expected, before this year’s end. WTI started to tumble shortly after the EIA data release as builds in gasoline and distillate stocks outweighed the surprise crude draw. By Irina Slav for Oilprice.com More Top Reads From Oilprice.com:<doc-sep>NEW YORK (Reuters) - U.S. crude stockpiles fell more than expected last week, while gasoline and distillate inventories rose, the Energy Information Administration said on Thursday. Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. Picture taken March 24, 2016. REUTERS/Nick Oxford Crude inventories fell 4.3 million barrels in the week to Aug. 31, compared with analysts’ expectations for a decrease of 1.3 million barrels. The decline brought stockpiles to 401.49 million barrels, the lowest levels since February 2015. Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose by 549,000 barrels, EIA said. “The large crude oil inventory drawdown makes for a bullish report, despite the appreciable gains in refined product inventory levels,” said John Kilduff, a partner at Again Capital Management in New York. Refiners’ demand for crude oil and drivers’ demand for gasoline remain supportive of the market, with gasoline demand remaining near the highest levels of the season, he said. Still, he cautioned that rising stockpiles at Cushing were somewhat bearish. U.S. crude futures rose slightly after the data was released, while gasoline futures pared gains owing to the unexpected build. Refinery crude runs rose by 81,000 barrels per day, EIA data showed. Refinery utilization rates rose by 0.3 percentage point to 96.6 percent of total capacity. Gasoline stocks rose by 1.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 810,000-barrel drop. Distillate stockpiles, which include diesel and heating oil, rose by 3.1 million barrels, versus expectations for a 742,000-barrel increase, the EIA data showed. Net U.S. crude imports rose last week by 500,000 bpd.<doc-sep>Oil declined on Thursday, with U.S. prices at their lowest settlement in more than two weeks, pressured by concerns over a potential decline in global demand on the back of the U.S. trade dispute with China and economic woes in emerging markets. Price pressures also included sizable weekly gains in U.S. stockpiles of gasoline and distillates, which include heating oil, outweighing support from a hefty decline in domestic crude inventories as well as ongoing expectations for tighter crude supplies tied to U.S. sanctions on Iranian oil that begin in early November. “Gasoline and heating-oil futures are still in the driver seat of the energy markets, after early week rallies due to [Gulf storm] Gordon have steadily come unwound since the short trading week started on Tuesday,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch. Trade tensions have also been “a drag on energy this week as the threat of an economic slowdown due to a new tariffs has weighed on commodities broadly,” he said. October West Texas Intermediate crude US:CLV8, the U.S. oil benchmark, lost 95 cents, or 1.4%, to settle at $67.77 a barrel on the New York Mercantile Exchange. US:CLV8 That was the lowest finish for the contract since Aug. 21, according to FactSet data. November Brent UK:LCOX8 the global benchmark, fell 77 cents, or 1%, to settle at $76.50 a barrel, following a loss of 1.2% in the previous session on the ICE Futures Europe exchange. The Energy Information Administration reported Thursday that domestic crude supplies fell by 4.3 million barrels for the week ended Aug. 31. That was larger than the 2.5 million-barrel fall expected by analysts polled by S&P Global Platts, and the decrease of 1.2 million barrels reported by the American Petroleum Institute Wednesday. Supply data were released a day later than usual due to Monday’s Labor Day holiday. Gasoline stockpiles rose 1.8 million barrels for the week, while distillate stockpiles added 3.1 million barrels, according to the EIA. The S&P Global Platts survey forecast a supply decline of 1.5 million barrels for gasoline, but distillates were expected to be unchanged. Among products, October gasoline US:RBV8 shed 0.7% to settle at $1.951 a gallon, while October heating oil US:HOV8 lost 1.1% to $2.209 a gallon. Earlier in the week, crude contracts had been buoyed by worries that tropical storm Gordon would cause damage to energy operations in the Gulf of Mexico but that storm weakened without significant impact on the energy complex in the region. Week to date, WTI crude futures trade nearly 3% lower, while Brent has lost more than 1%. “Speculative investors have been scaling back their positions following Brent’s failure to break above $80,” said Ole Hansen, head of commodity strategy at Saxo Bank. Short-term supply concerns have included the continuing risks to Iranian supply due to U.S. sanctions. However, in a Thursday note, Mihir Kapadia, chief executive officer and founder of Sun Global Investors, said “oil prices have dipped in response to emerging-market stock declines. The uncertainty in emerging markets has weighed on trader sentiment, which has already been unsettled by the prospect of further U.S. trade tariffs on China.” Crude production from members of the Organization of the Petroleum Exporting Countries is also on the rise, as expected following a pledge from the group to ease back on output cuts implemented at the start of 2017. OPEC, not including newest member Congo, saw output rise to a 10-month high to 32.89 million barrels a day in August, according to an S&P Global Platts survey. Also on Nymex, natural-gas prices ended lower after a separate EIA report revealed that domestic supplies of the commodity rose by 63 billion cubic feet for the week ended August 31. Analysts polled by S&P Global Platts had forecast a climb of 60 billion cubic feet. October natural gas US:NGV18 slipped 0.8% to $2.772 per million British thermal units. --Mark DeCambre contributed to this report<doc-sep>
Crude futures reversed course on Thursday after U.S. data showed gasoline inventories rose unexpectedly last week, overshadowing a bullish drawdown in crude. U.S. crude inventories fell more than expected last week as refining runs increased, while gasoline and distillate inventories rose, the Energy Information Administration said on Thursday. Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose by 549,000 barrels, EIA said. "The slow climb back of crude oil levels at Cushing is somewhat bearish, and the absence of Chinese buyers of U.S. crude oil is depressing export volumes," said John Kilduff, a partner at Again Capital Management in New York. "Domestic production is not growing at the pace it was earlier in the year, either." U.S. West Texas Intermediate (WTI) crude futures fell 95 cents to $67.77 a barrel, a 1.4 percent loss. Brent crude futures lost 63 cents to $76.64 a barrel, a 0.8 percent loss. Earlier in the session, both contracts had traded higher, encouraged by a weaker dollar and evidence of strong U.S. fuel demand. Emerging market stocks, bonds and currencies have plunged in recent weeks in response to financial crises in places like Turkey, South Africa and Venezuela. "In the last week we've seen the focus shift again from supply back to demand and the continued calamity in emerging market stocks, bonds and currencies is weighing on the medium and longer-term demand outlook," said Saxo Bank senior manager Ole Hansen. "We did see quite a lot of momentum last week and then oil was shot down in flames after its failed attempt to break above $80 ... now we have the extra dimension of a spike in oil prices that can only increase the pain (for consumers) and the risk of a slowdown in demand." The market is already preparing for the loss of at least 1 million barrels per day (bpd) in Iranian crude supplies from early November, when U.S. sanctions against Tehran come into force. The oil price has risen by 3 percent since the U.S. government announced the sanctions in May. "The million-dollar question is how much Iranian oil will be lost after Nov. 4 when the second round of sanctions kicks in?" said PVM Oil Associates strategist Tamas Varga. "If it is around 1 million bpd, or more, as expected, the fragile supply/demand balance will be upset and oil prices will stay supported." The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday said it expected global oil demand to break through 100 million bpd for the first time this year. A further risk is seen in OPEC-member Venezuela, where a government and political crisis has halved oil production in the past two years to little more than 1 million bpd.