Prices Drop As The Crude Inventory Builds Up



US crude oil stocks increased by 1.6 MMBbl. Gasoline and distillate inventories increased 5.1 MMBbl and 0.7 MMBbl, respectively. Yesterday afternoon, API reported a crude oil build of 3.64 MMBbl alongside a gasoline build of 4.38 MMBbl and a distillate draw of 0.67 MMBbl. Analysts, to the contrary, were expecting a crude oil draw of 0.42 MMBbl. Total petroleum inventories posted an increase of 0.1 MMBbl.

US crude oil production increased 100 MBbl/d last week, per EIA. Crude oil imports were up 0.22 MMBbl/d last week, to an average of 6.2 MMBbl/d. Refinery inputs averaged 16.3 MMBbl/d (0.1 MMBbl/d less than last week’s average).

WTI futures were up for a second day on Tuesday, with the January contract settling at $58.41/bbl. Intraday trading lifted prompt futures to a high of $58.56/Bbl before heading lower into the close. Renewed optimism over trade talks between the US and China was a likely driver, but trading volume was also fairly low during the session. With OPEC/non-OPEC meetings planned for December 5-6 in Vienna, yesterday’s price movements could very well have been the result of traders putting on positions ahead of the talks. Nevertheless, Tuesday’s news that China’s top trade negotiator, Liu He, had a phone conversation with Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer marks at least some improvement in US-China relations. According to a statement from China’s commerce ministry, “both sides discussed resolving core issues of common concern” and discussions were still ongoing regarding a phase one agreement.

Petroleum Stocks Chart



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