Published: Fri, April 28, 2017
Business | By Max Garcia

US Gasoline Inventories Rose for the First Time in 9 Weeks

US Gasoline Inventories Rose for the First Time in 9 Weeks

Crude oil closed down sharply by the end of the trading day Wednesday after investors mulled over the latest data set from the U.S. Energy Information Administration.

EIA reported crude oil stocks down 1 million barrels and total stocks down 1.1 million barrels from one year ago.

OPEC and several other producers including Russian Federation agreed in December to pump less oil in an orchestrated effort to end an oversupply weighing on prices.

A surprise build in gasoline inventories pressured gasoline prices, which in turn pressured crude oil (IXC) (IYE) (SCO) (IEZ) prices on April 19, 2017.

Traders said that the rising USA crude production posed a concern that the oil supply overhang would continue, while the jump in gasoline stocks implied a stutter in demand.

Prices rallied by 15 per cent since November 30, 2016 when Opec's 13 members led by the group's largest producer Saudi Arabia, agreed to curb output by more than one million barrels a day.

Cost of the United States light crude oil decreased $0.43 to stand at $52.75, while price of the Brent crude oil fell $0.46 to trade at $55.43.

Members of the Organization of the Petroleum Exporting Countries are cutting oil production by 1.2 million bpd from January 1 for six months, the first reduction in eight years.

And OPEC, in the wake of its production-freeze agreement late a year ago, appears to be once again losing market share - the recapturing of which was the reason the oil sheiks engaged in their price war in 2014 in the first place. The fall in gasoline inventories could support gasoline and crude oil prices.

Inventory data is scheduled for release by the American Petroleum Institute at 4:30 p.m. EDT (2030 GMT) on Tuesday, followed by the official EIA report at 10:30 a.m. EDT on Wednesday. The production has now increased for nine consecutive weeks.

USA crude futures settled down $US1.97 to $US50.44 a barrel, a 3.8 per cent drop, the worst-one day decline since March 8, as investors bailed out of long positions in response to the bearish inventory figures.

"There's been a lot of attention paid to OPEC production cuts, while nearly nobody has focused on the gains elsewhere", Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone.

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