Oil Falls As EIA Reports Large Crude Inventory Build

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By Irina Slav

Crude oil prices fell today after the Energy Information Administration reported a build in crude oil inventories of 4.5 million barrels for the week to July 29.

This compared with a draw of an almost identical size for the previous week. U.S. crude oil inventories are at 426.6 million barrels, which is 7 percent below the five-year average for this time of the year.

The American Petroleum Institute yesterday reported an unexpected inventory build in crude oil, at over 2 million barrels, while analysts had expected a modest draw of less than 500,000 barrels for the week to July 29.

In fuels, the EIA estimated a mixed picture.

Gasoline inventories added a modest 200,000 barrels in the week to July 29, with production averaging 9.3 million barrels daily.

This compared with a draw of 3.3 million barrels and production of 9.7 million barrels daily for the previous week.

In middle distillates, the EIA estimated an inventory decline of 2.4 million barrels for the week to July 29, with production averaging 4.9 million barrels daily.

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This compared with an inventory draw of 800,000 barrels for the previous week and production averaging 5 million barrels daily.

Refineries processed 15.9 million bpd of crude last week, operating at 91 percent of capacity. This compared with 16 million bpd for the previous week, with refineries operating at 92.2 percent of capacity.

The middle distillate supply situation has been tightening, with U.S. exports hitting records as European buyers shun Russian diesel and other distillate fuels. This, however, is causing concern for the domestic market, where demand is set to increase in the coming weeks as harvest season in the Midwest begins.

Oil prices, in the meantime, have been weighed down by recession worry about the United States. Traders are also waiting for the OPEC+ meeting today, where the cartel will say whether or not it will increase production in September.

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At the time of writing, Brent crude was trading at $100.40 per barrel, with West Texas Intermediate at $94.24 per barrel both down from opening.

By Irina Slav for Oilprice.com

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