Oil Holds Gains Despite Crude Inventory Build

Crude oil prices moved higher today after the Energy Information Administration reported a crude oil inventory increase of 2.6 million barrels for the weekend October 21.

This compared with a draw of 1.7 million barrels for the previous week, accompanied by moderate moves in fuel inventories.

Last week, the EIA reported a draw of 1.5 million barrels in gasoline inventories and a moderate increase of 200,000 barrels in middle distillate inventories.

This compared with a gasoline inventory draw of 100,000 barrels for the previous week and the same-size increase in distillate inventories.

Gasoline production during the week to October 21 averaged 9.4 million barrels daily, virtually unchanged on a week earlier.

Middle distillate production averaged 5 million barrels daily last week, which was slight decline over the previous week.

The supply situation with distillates has been tense both in the US and in Europe as demand continues to exceed supply and the chances of this changing remain slim due to apparently insufficient refining capacity.

Indeed, Bloomberg reported earlier today that the diesel shortage is spreading across the United States, with at least one fuel supplier initiating emergency delivery protocols.

Oil prices, meanwhile, have been seenwing, pushed in different directions by a weaker dollar, on the one hand, and lower demand from China, on the other.

Meanwhile, the Biden administration is trying to solve the fuel supply problem, with the latest move involving Energy Secretary Jennifer Granholm meeting with industry executives to discuss the possibility of shuttered refineries reopening.

The industry poured a cold shower on these hopes, however, with executives saying this was not an option, echoing a sentiment expressed earlier this year by Chevron’s Mike Wirth.

“Building a refinery is a multi-billion dollar investment. It may take a decade. We haven’t had a refinery built in the United States since the 1970s. My personal view is that there will never be another refinery built in the United States,” the supermajor’s chief executive wrote in June.

By Irina Slav for Oilprice.com

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