An Unexpected Decline in US Crude Oil Inventories

An Unexpected Decline in US Crude Oil Inventories: Yesterday, Tuesday, March 17, 2021,
the American Petroleum Institute (API) announced a sudden decline in US crude oil inventories by one million barrels for the past week ending on March 12, after analysts’ expectations revolved around an increase in inventories by 2.964 million barrels for this week.

The American Petroleum Institute recorded a sharp increase in oil inventories in the previous week, which reached 12.792 million barrels after analysts had expected an increase of 816 thousand barrels, which is an estimate much lower than the actual number recorded by the API.

Crude oil prices this week

The decline in oil prices increased on Tuesday ahead of the release of the American Petroleum Institute data.

WTI crude fell $ 0.68 on the day (-1.04%), at $ 64.71.

Despite its decline for that day, West Texas Intermediate crude was still trading above $ 0.70 a barrel during the same time last week.

The benchmark Brent crude oil price decreased at the same time of today by $ 0.55 (-0.80%) to $ 68.33,
or about $ 0.80 per barrel for the week.

After the release of the American Petroleum Institute data,
the WTI crude index was trading at $ 64.94, while Brent crude was trading at $ 68.47.

Weekly energy production rates

Average daily oil production for the United States increased by 900,000 barrels to 10.9 million barrels per day,
according to Energy Information Administration (EIA) data.

The EIA also released data indicating that gasoline inventories decreased, by 926 thousand barrels from the week ending March 12,
in addition to a decrease of 8.499 million barrels in the previous week.

Analysts had expected a decline of 2.996 million barrels during the week.

Distillate inventories also increased this week, by 904 thousand barrels, after a decrease of 4.796 million barrels last week.

Factors That Will Lead to a Decline in Oil Prices In the Coming Period

US President-elect Joe Biden plans to carry the first large tax increase since 1993,
to help fund a long-term economic program.

Some analysts have pointed to the possibility of a decline in crude oil prices in the coming period as a result of Biden’s plans to raise taxes. This decrease in prices is also due to investors thinking about the potential impact of implementing these plans and their impact on the companies’ financial sectors.

Changes in the Oil Supply Market for India

The United States overtook Saudi Arabia as the second supplier of crude oil to India.

Last February, India significantly boosted its imports of crude oil from the United States, at the same time reducing its purchases from the Kingdom of Saudi Arabia, the largest oil exporter in the world, to the point that it changed the ranking between Saudi Arabia and the US, which has made US top Saudi Arabia as the second-largest supplier of oil in India, according to data released by Reuters on Monday.

India

In recent months, India, the world’s third-largest importer of oil, has been trying to diversify its crude oil imports and not depend largely on Middle Eastern oil.

This situation was the result of strict OPEC policies, rising oil prices, and instability in the state of the market,
which affected India’s oil consumption and its economy.

OPEC cuts to oil production and additional Saudi cuts

This year, OPEC cuts to oil production and additional Saudi cuts have reduced the market availability of Saudi crude oil.

the increase

Also, the increase from West Texas Intermediate crude against Brent at the end of last year and at the beginning of this year increases India’s appetite for increasing its purchases of American crude oil, according to “Refinitiv” analyst Ehsan Ul Haq told Reuters.

Reuters commercial sources

According to Reuters commercial sources, India’s imports of crude oil from the United States rose 48% over the course of a month to a record high of 545,300 barrels per day in February.

This changed the arrangement and made the United States the second-largest supplier of oil to India, after Iraq.

Kingdom of Saudi Arabia

The ranking of the Kingdom of Saudi Arabia, which has always been the highest or second-largest supplier to India during the past ten years, fell to fourth place in February, as Indian imports of Saudi oil declined by 42% per month to their lowest level in a decade, which is 445,200 BPD, according to data published by Reuters.

India could keep imports from Saudi Arabia low this month and the following month, after OPEC’s cuts were described by India as “Artificial cuts to keep the price going up”

India relies on imports for more than 80% of its consumption, and it imports 60% of crude oil from the Middle East.

It is reported that India is now asking the Indian state-owned refineries, for its strong aspiration to diversify imports away from the Middle East, as the third-largest importer of oil in the world is not satisfied with OPEC’s policies in managing the oil market and raising its prices.

The Attempt to Retrieve the UAE Oil Cargo Held In the United States

A company controlled by the Emirate of Fujairah’s ruler has requested the US authorities for the oil cargo
that had previously seized it, as the US claimed that the cargo was carrying Iranian crude oil.

According to Bloomberg

According to Bloomberg, Fujairah International Oil and Gas Corporation (FIOGC) said,
before a court in Colombia, that the oil cargo (two million barrels of crude oil) originally came from Iraq

— but it did not disclose the supplier— then the UAE company sold the crude oil to a buyer from China.

Early last month, reports said the United States would detain the ACHILLES oil tanker, which was said to be on its way to the US coast.

According to Bloomberg, the owner of the giant oil tanker ACHILLES (the Greek company Capital Ship) informed the United States that it may have loaded Iranian oil on board without knowledge, believing that the crude oil came from Iraq.

However, Fujairah International Oil and Gas Corporation stated that the cargo was Iraqi.

According to a Reuters

According to a Reuters report, Iran has denied ownership of the oil cargo being held in the United States.

It indicated that the cargo is not the property of the Iranian state. Tehran said the US seizure of the ship was an act of piracy.

“This area belongs to the private sector,” an Iranian Foreign Ministry spokesman said at the time.

Iran also said that the United States owes it about $ 70 billion in lost oil revenues due to unilateral sanctions,
and that repaying these lost revenues will be a prerequisite for negotiations with the Biden administration over the US returning to the Iran nuclear deal.

An Unexpected Decline in US Crude Oil Inventories

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