U.S. crude inventories up, market upset

Xinhua News Agency | Aug 16, 2019 at 4:38 AM

HOUSTON, Aug. 15 (Xinhua) -- Contrary to industry analysts' expectations, U.S. crude oil inventories have increased during the last two weeks, making energy market unstable, according to a report released Thursday by an investment bank.

"Crude inventories climbed for the second straight week to plus 1.6 million barrels, counter to the consensus of a 2.8 million barrels draw," said Crawford Kob, an energy analyst with Houston-based investment bank Tudor Pickering Holt & Co., in an e-mail.

"That's adding fuel to the fire of yesterday's rough energy market," said Kob.

Oil prices declined on Wednesday as unexpected builds in U.S. crude inventories weighed on the market. The West Texas Intermediate (WTI) for September delivery erased 1.87 U.S. dollars to settle at 55.23 dollars a barrel, while Brent crude for October delivery lost 1.82 dollars to close at 59.48 dollars a barrel.

Several factors accounted for the increased inventory last week, analysts said.

One leading cause was lower-than-expected production at refineries. According to U.S. Energy Information Administration (EIA), U.S. crude oil refinery inputs averaged 17.3 million barrels per day (b/d) last week, 475,000 b/d less than the previous week's average. Refineries operated at 94.8 percent of their operable capacity last week.

The weekly crude oil imports hiking was another cause. U.S. crude oil imports averaged 7.71 million barrels b/d last week, up by 566,000 b/d from the previous week, while the market had expected a draw of 5.6 million barrels in the past two weeks.

"Overcapacity could drive down rig counts," Joe Romm, former CEO of FrontPageLive.com, and current editor-in-chief of the think tank Think Progress's Climate Progress online magazine, told Xinhua.

In fact, the number of active drilling rigs in the United States decreased by eight to 934 last week, and 123 rigs down from a year ago, according to the weekly data released by oilfield services provider Baker Hughes on Friday.

These included 764 oil rigs operating in the U.S. oil fields, down six; 169 gas drilling rigs, down two; and one miscellaneous drilling rig, the same as the previous week, the Houston-based oilfield services company reported.