Swell Of US Oil Inventories Drops Oil

Swell Of US Oil Inventories Drops Oil: According to the American Petroleum Institute (API) data on Tuesday (March 9, 2021), US inventories rose by 12.792 million barrels of US crude oil in the week ending March 5th.

Analysts had expected an increase of 816,000 barrels of oil for the same week.

The (API)

In the previous week, the (API) announced a large increase in crude oil inventories,
which reached 7.356 million barrels, after analysts had expected an inventory of 928,000 barrels.

The US Energy Information Administration (EIA)

The next day, the US Energy Information Administration (EIA) data came to announce a massive increase in US inventories, which reached 21.6 million barrels. Inventories are expected to continue to increase further.

The (API) announced another sharp drop in gasoline inventories by 8.499 million barrels in the week ending March 5, in addition to a decline of 9.933 million barrels in the previous week.

While analysts had expected a decline of 3.467 million barrels.

Distillate inventories also decreased significantly, reaching 4.796 million barrels during the week,
after last week’s drop by 9.053 million barrels.

Cushing inventories increased by 295,000 barrels.

Last week, stocks increased in the Cushing Petroleum Center by 732,000 barrels.

Weekly Oil Price Developments

Oil prices dropped on Tuesday before the release of the data, after a two-day increase.

At midday, before the release of the American Petroleum Institute data, the price of WTI was down by $ 0.99 on the day (-1.52%), at $ 64.06.

However, the WTI is still trading over $ 64 a barrel, despite falling today.

The Brent crude benchmark had also fallen on the day, $0.75 at that time (-1.10%) to $67.49—also more than $4 per barrel up on the week.

After the release of the American Petroleum Institute data,
the WTI crude index was trading at $ 63.79, while the Brent crude benchmark was trading at $ 67.22.

Energy Production Rates For This Week

According to the US Energy Information Administration (EIA),
US oil production increased by 300,000 barrels per day, reaching 10.0 million barrels per day.

As for last February, US crude production averaged 10.4 million barrels per day, down 500,000 barrels per day from January production, according to the US Energy Information Administration (EIA) monthly report that releases short-term energy projections issued on Tuesday, March 9th.

This is largely due to the closure related to the winter storm,
in addition to what the oil market has been suffering since the Coronavirus pandemic.

Factors That Affected Oil Recently

Continuing severe weather will likely result in overall losses in crude oil production of between 20 and 25 million barrels.

The cold wave in Texas caused problems of prolonged damage,
which greatly affected the American oil industry, like blackouts,
the closure of frozen pipes and roads greatly affected the production of oil and natural gas in the United States,
in addition to the closure of the refineries whose output exceeded Hurricane Harvey in the year 2017.

According to Bloomberg

There are only seven US refineries operating to refine oil after 18 US refineries broke down due to the Texas freeze, according to Bloomberg.

The 18 refineries account for up to 5.5 million barrels of production capacity to process crude oil per day.

Although crude oil inventories had fallen to a five-year average before the freeze,
refinery outages halted inventory withdrawals, and crude oil inventories swelled by 22 million barrels in the past week,
according to the Energy Information Administration.

The Port Arthur refinery at Motiva

The Port Arthur refinery at Motiva, the largest in the United States with a daily capacity of 607,000 barrels,
resumed the process of the largest crude oil processing unit relatively quickly, on February 26, after being idle for 11 days.

Starting Sunday, ExxonMobil’s Baytown refinery was scheduled to resume operation of the Pipestill-8 crude distillation unit with a daily capacity of 2803,000 barrels, and Marathon has also restarted the crude distillation unit at the Galveston Bay refinery.

Starting Monday, Total’s Port Arthur refinery will resume the process of the CDU.

More refineries are set to be established this week, according to Bloomberg.

Other reports indicated that Shell’s Deer Park refinery,
which has a daily capacity of 318,000 barrels, has stopped until April.

Expectations Of Energy Information Administration For The Oil Market

The Energy Information Administration’s expectations for the oil market were very upward and promising,
as expectations came that the average price of Brent crude oil will average around $ 60.67 per barrel in 2021,
up to $ 7.47 from February expectations, and $ 58.51 per barrel in 2022,
and the price of the WTI crude index.

The median amounted to about $ 57.24 a barrel in 2021,
with an increase of $ 7.03 a barrel compared to its most recent report,
and at $ 54.75 a barrel in 2022.

The OPEC group

This upward amendment came from tightening supply expectations during the first half of the year after the OPEC group unexpectedly extended the bulk of its production cuts until April at its March 4th meeting.

The Energy Information Administration

The Energy Information Administration expects that the extension of OPEC’s quota will push the price of benchmark Brent crude to about $ 65: $ 70 per barrel during the months of March and April,
an increase of more than $10 per barrel over its expectations in the previous month,
however, prices will decline to about $ 58 per barrel for the second half of the year as higher supply slows global inventory withdraw.

United States Strategic Oil Reserves

As part of a recent crude oil sale, the US Department of Energy awarded contracts to sell 10.1 million barrels of the Strategic Petroleum Reserve.

At the beginning of February 2021, the competent authorities of the Ministry of Energy issued a notice of sale from the Strategic Petroleum Reserve to meet the requirements of the mandatory sale of 10.1 million barrels during the 2021 fiscal year.

Of the total 10.1 million barrels of crude oil:

4.1 million barrels from the Brian Mond site near Freeport, Texas.

3.3 million barrels from the West Hackberry site near Hackberry, Louisiana;

And 2.7 million barrels from the Big Hill site near Winnie, Texas.

Delivery dates will be set in April and May of this year, with early deliveries available in March 2021.

The US Strategic Petroleum Reserve

The US Strategic Petroleum Reserve was established
in the 1970s when the Arab oil embargo caused a fuel crisis in the United States.

On February 26, 2021, the Strategic Petroleum Reserve was 637.8 million barrels of crude oil.

Swell Of US Oil Inventories Drops