US Oil Inventories Increased By 3.91 Million Barrels


US Oil Inventories Increased By 3.91 Million Barrels

US Oil Inventories Increased By 3.91 Million Barrels: The American Petroleum Institute (API) announced yesterday, Tuesday, March 30, 2021, that crude oil inventories rose by 3.910 million barrels for the week ending March 26th.

Analysts had expected an inventory increase of only 107,000 barrels,
which is much lower than the actual increase for this week.

In the previous week, the API reported that oil inventories reached 2.927 million barrels,
while analysts had expected an increase of 272,000 barrels.

The API also announced that gasoline inventories decreased by 6.012 million barrels in the week ending March 26, in addition to a decline in inventories of the previous week, which reached 3.728 million barrels.

Analysts had expected an increase of 730 thousand barrels for this week.


Weekly Oil Prices

Oil trading prices decreased the day before the publication of the American Petroleum Institute data,
as the price of West Texas Intermediate crude fell $ 0.96 before midday, and it was trading at $ 60.60 a barrel,
while the benchmark Brent crude price decreased $ 0.78 and was trading at $ 64.20 a barrel.

At midday, after the publication of the American Petroleum Institute data,
the WTI crude index was trading at $ 60.46, while Brent crude was trading at $ 64.02


Factors That Affected Oil This Week

Prices returned to a state of instability this week, due to an expected delay in oil shipments through the Suez Canal.

And the OPEC meeting on Tuesday, which saw its members agree to review oil demand estimates for this year based on the push of Saudi Arabia, stated that the number used by OPEC is very high.

OPEC did not announce the official oil demand figure.


Energy Production Rates This Week

Daily oil production in the US rose to 11.0 million barrels in the week ending March 19,
according to the latest data released by the Energy Information Administration.

Distillate stocks also witnessed an increase in inventories this week by 2.595 million barrels for this week,
after an increase of 246 thousand barrels last week.

Cushing’s inventory numbers rose by 904,000 barrels. 


UAE Launches Its Oil Futures

The UAE potentially made history today when it sounded the starting pistol for its Murban crude oil futures,
to be traded on the brand new ICE Futures Abu Dhabi exchange.

The price of oil reached $ 63.93 a barrel after midnight GTM, according to Reuters,
and the UAE hopes it will become a regional benchmark, adding that 2,132 contracts of 1,000 barrels each were traded at that time, according to ICE’s Twitter account.

The move by the United Arab Emirates is one of its attempts to revolutionize the oil trade in the Middle East.

Per a Bloomberg report, the introduction of the futures removes the restraints that until now kept the spot market for oil closed off for large Middle Eastern producers, who either sold their crude directly to refiners or to the foreign companies operating their fields.

This, Bloomberg noted, prevented buyers from reselling the oil or profiting from arbitrage deals.

“If successful — and I think the chances are good — Murban futures could be a pivotal moment for the Middle East crude pricing,” according to Vandana Hari, founder of Singapore-based Vanda Insights.

If “a sizable chunk of the Middle Eastern crude trades freely in the spot market,”
other Middle Eastern producers may follow suit with their own futures.

There are two benchmark contracts in the Middle East right now: the Dubai benchmark,
operated by S&P Platts, and the DME (Dubai Mercantile Exchange) Oman.

The Murban contract is tied to the most popular crude oil grade produced by Abu Dhabi’s ADNOC.

Physical delivery of the oil bought under this contract will be made at the port of Fujairah in the UAE.

To ensure sufficient physical supplies for delivery, the Abu Dhabi producing company,
ADNOC, invested $ 900 million in building a storage space for 40 million barrels near the coastal city.

Every day, ADNOC produces approximately 2 million barrels of jam.


Suez Canal Crisis with Oil Tankers

The Suez Canal crisis prompted the Cheniere LNG tanker and the Shell oil tanker to reroute
as the Suez Canal is still blocked by the Ever Given containers.

On Saturday, CNBV reported that at least ten tankers and containers for crude oil and liquefied gas have been diverted,
and the number is expected to increase, according to CNBV, citing data from MarineTraffic and Calberdat.

According to MarineTraffic, There are more than 200 ships stuck in the Suez Canal.


The Results of the Suez Crisis

The Suez Crisis incident led to a rise in oil prices last week after it became clear that the liberation of Ever Given,
one of the largest container ships in the world, could take more than a week.

There are also about 3.6 million barrels of crude oil and petroleum products passing through the choke point every day.

As a result, the price of both Brent benchmark and West Texas Intermediate crude rose on Thursday by more than 4%,
but it began to decline on Friday due to the rise in the US dollar and factors related to the global epidemic,
in addition to the smaller quantities of oil sent by Middle Eastern producers through the Suez Canal compared to the other choke points. 

If the impact of the Suez Crisis on oil prices is limited, it is costing global trade a lot.

According to experts at the insurance company Allianz, global trade may suffer a loss ranging between 6 and 10 billion dollars per week from the accident, with the annual trade growth falling by 0.2% to 0.4 %.

For every day the channel closes, it causes a loss of trade of $ 9.6 billion.

The latest reports say “Ever Given” has been successfully re-floated,
but efforts are still underway to get the ship out of the canal.


Venezuela Buys Coronavirus Vaccines with Oil

Nicolas Maduro, head of the troubled South American country that houses the world’s largest oil reserves,
said on Sunday that Venezuela could pay oil for “Covid-19” vaccines.

He added that Venezuela was struggling with the collapse of its economy and oil production even before the spread of the epidemic.

But the crisis exacerbated with a drop in oil prices in 2020 while Venezuela continued to struggle to reverse the decline in its oil production.

Crude oil exports have also decreased dramatically since the United States imposed sanctions on Venezuela’s oil exports in early 2019, which prevented US refiners from importing oil from Venezuela.

“We are ready and prepared for oil for vaccines, Maduro added,” but we will not beg anyone.”

He also stated that Venezuela has two options to purchase vaccines under the WHO (COVAX) mechanism to deliver vaccines to poor countries.

The first option is to unfreeze Venezuelan funds and accounts, and the other is the oil-for-vaccines plan.

Venezuela’s exports of crude oil and refined products fell in 2020 to their lowest level in 77 years,
as the United States continues to escalate sanctions against the Maduro regime and anyone has found a deal with it.