A day after the American Petroleum Institute estimated Crude Oil inventories had added more than 13 million barrels, the Energy Information Administration confirmed a build, and a much higher one, at 19.2 million barrels for the week to April 10.
A week earlier, the EIA reported a 15.2-million-barrel inventory build.
Analysts had expected a more moderate inventory increase, at 11.6 million barrels. Oil prices, already pressured by the API report, are likely to continue down today.
The EIA also reported a 4.9-million-barrel inventory increase in gasoline inventories, the third weekly inventory increase in a row as drivers cannot drive amid national lockdowns despite the sizeable decline in fuel prices. A week earlier, gasoline inventories rose by 10.5 million barrels.
Distillate fuel inventories added 6.3 million barrels last week, after the week before they added a modest 476,000 barrels.
Gasoline production averaged 5.9 million bpd last week, up from 5.8 million bpd a week earlier. Distillate fuel production last week stood at 4.9 million bpd, compared with 5 million bpd a week earlier.
Refiners in the United States—and elsewhere in the pandemic-stricken world—are cutting run rates and some have begun shutting down facilities as the supply of fuels continues to exceed demand by a growing margin.
The pandemic is destroying demand, and this could continue for months depending on how the infections curve develops.
Last week, refineries in the U.S. processed an average 12.7 million bpd of crude. This compares with 13.6 million bpd a week earlier and 14.9 million bpd three weeks ago.
Production is also falling as selling prices become prohibitively low for many oil producers. Media have reported oil companies have idled 260,000 bpd worth of production in North Dakota alone and Texas producers are discussing obligatory cuts with the state’s energy regulator. The size of the cuts would be 1 million bpd, if agreed.
Meanwhile the outlook for prices is not improving. At the time of writing, Brent crude was trading at $28.10 a barrel, with West Texas Intermediate at $20.01 a barrel, both down from yesterday’s close.