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Prices Drop Due to Bearish Inventory Report

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US crude oil stocks increased by 0.8 MMBbl. Gasoline and distillate inventories increased 5.4 MMBbl and 4.1 MMBbl, respectively. Yesterday afternoon, API reported a crude oil build of 1.41 MMBbl alongside gasoline and distillate builds of 4.9 MMBbl and 3.2 MMBbl, respectively. Analysts, to the contrary, were expecting a crude oil draw of 2.76 MMBbl. Total petroleum inventories posted a significantly large increase of 17.2 MMBbl.

US crude oil production decreased by 100 MBbl/d last week, per EIA. Crude oil imports were up 0.89 MMBbl/d last week to an average of 6.9 MMBbl/d. Refinery inputs averaged 16.6 MMBbl/d (0.20 MMBbl/d less than last week’s average).

Prompt WTI futures on Tuesday settled slightly higher than Monday’s close at $59.24/Bbl (up $0.22/Bbl) and were little changed from the end of the day on Friday. Indeed, daily price movements have been within a relatively tight band of $1/Bbl since OPEC+ agreed to deepen production cuts last week as market participants remain cautious about further upside potential amid the still-ongoing US–China trade war. All eyes right now are on the upcoming December 15 deadline for the next round of US tariffs on Chinese goods. US and Chinese officials are discussing potentially pushing out that deadline after Beijing granted new waivers for tariffs on soy-beans and pork earlier this week. Conciliatory gestures and daily communications aside, there still appears to be a lack of trust. This lack of trust exists not only between US and Chinese negotiators, but also among market participants who have seen similar developments before and are wary of yet another disappointment.

Petroleum Stocks Chart

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