“Everyone is looking for a drawdown in inventories,” noted Tradition Energy senior director for market research Addison Armstrong ahead of the weekly report compiled by the Department of Energy’s statistical arm, the Energy Information Administration. Oil traders inspect this report in depth as it is considered a good gauge of supply and demand for domestically produced oil.
Analysts polled by Dow Jones Newswires had expected data from the EIA would show that domestic oil inventories fell by 1.7 million barrels for the week ended June 21. Based on that prediction and a slew of better-than-expected United States economic data released early this week, including the significant jump in new home prices recorded by the Standard & Poor’s Case-Shiller Index, crude-oil futures settled slightly higher Tuesday. Light, sweet crude for August delivery rose 14 cents, or 0.2 percent, to close at $95.32 per barrel on the New York Mercantile Exchange, while ICE North Sea Brent crude oil for August delivery ended the day 10 cents higher at $101.26 per barrel.
However, the government figures showed that crude inventories held steady last week, rather than declining as analysts had expected. The EIA reported that crude-oil inventories remained unchanged from the previous week’s 394.1 million barrels, a level well above the upper limit of the average range for this time of year.
As a result, crude for August delivery dropped 67 cents, or 0.7 percent, to $94.65 per barrel on the New York Mercantile Exchange in Wednesday morning trading, after briefly falling below $94 per barrel just after the report was released. Oil futures also took a hit from Wednesday’s lone major U.S. economic report; gross domestic product. The Department of Commerce said earlier that the U.S. economy did not grow as quickly in the first quarter as previously estimated, dropping GDP down to a 1.8 percent annualized pace from 2.4 percent. The downwardly revised GDP came as a result of less-than-expected consumer spending and weaker business investment.
The inventory level was maintained even though U.S. refinery inputs averaged 15.7 million barrels per day last week, a 173 thousand barrel-per-day increase above the previous week’s average. A 138-thousand barrel decrease in crude imports offset that gain in refinery output.
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