Oil Prices Sudden Increase In US Inventories

Oil Prices sudden Increase In US Inventories:

The American Petroleum Institute (API) data on Tuesday, February 23, 2021,
indicated a rise in crude oil inventories for the last week ending February 19, by 1.026 million barrels.

Analysts had expected an inventory declined by 5,190 million barrels for this week.

In its statement for the previous week, (API) mentioned that the decline in US crude oil inventories reached 5.8 million barrels,
after analysts’ expectations of a decrease of 2.429 million barrels of inventories.

Weekly Oil Prices

Oil trading prices rose on Tuesday before the data was released as a result of reducing oil supplies
due to the oil and gas closure in the United States.

In the middle of Tuesday, just before the release of the data,
the price of WTI rose by $ 0.33 per day (+ 0.53%) to $ 62.03
– an increase of nearly $ 1 over the same time last week.

Brent crude rose by $ 0.52 at that time (+ 0.82%) and reached $ 65.83
– increasing more than a dollar for that week.

After the American Petroleum Institute data was released,
WTI was trading at $ 61.91, while Brent crude was trading at $ 65.71. 

 

Weekly Production Capacity Rates

According to Energy Information Administration data, daily US oil production decreased by 200,000 barrels to reach 10.8 million barrels per day.

The American Petroleum Institute reported a low gasoline inventory of 66,000 barrels in the week ending February 19 after an increase of 3.9 million barrels the previous week.

Analysts had expected a decline of 3.062 million barrels during the week.

Distillation inventories witnessed a decline of 4.489 million barrels during the week,
after a decrease of 3.5 million barrels last week.

Cushing inventories rose by 2.783 million barrels.

They decreased last week by 3.0 million barrels.

 

Expectations Related To The Next OPEC+ Meeting

The leaders of the OPEC+ alliance, Saudi Arabia and Russia are reportedly once again at odds over oil supply management ahead of another crucial meeting of the group next week.

The oil market has not forgotten the disaster of last March when Russia and Saudi Arabia disagreed on how to deal with the halt in demand at the beginning of the epidemic and terminated the OPEC+ agreement for a month.

According to Bloomberg, it is expected that Saudi Arabia, in 3-4 March meetings,
will decide with the OPEC+ alliance to stabilize production in April.

It is also expected that Russia’s proposals are in favor of further easing production cuts,
especially Russian Deputy Prime Minister Alexander Novak said earlier this month that the global oil market was balanced and the current price of oil fully reflected this market situation. 

Therefore, the two leaders of the pact are once again going into an OPEC+
meeting with diverging views on how to manage supply to the market.

Oil producers need to remain extremely cautious as uncertainty on the market is still very high,
Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said last week.

Saudi Arabia, through its extra cut of 1 million barrels per day (BPD) in February and March has helped the efforts of the OPEC+
alliance to tighten the oil market in the first quarter,
while demand is still relatively weaker, especially outside Asia.

The extra Saudi cut has been one of the factors that have supported the oil price rally in recent weeks.

With oil above $60 a barrel, however, analysts reckon more OPEC+ members,
especially Russia, would likely push for a more aggressive easing of the cuts from April.

 

Results Of Oil Price Disruption

Due to high oil prices, Iraq halted a prepaid deal to supply oil with a Chinese company that made the deal less profitable than it was two months ago.

Iraq’s oil minister, Ihsan Abdul Jabbar, said in an interview for BBC Arabic that “We had concerns that oil prices would not rise above $40 when we announced this deal for the first time in the history of Iraq,” as quoted by Reuters.

Yet shrinking global inventories of crude oil and the production and refining disruption in Texas last week caused prices to rebound more strongly than OPEC or any of its members might have reasonably expected.

The shrinking global inventories of crude oil and the disruption of production and refining in Texas due to the weather changes last week led to a price rebound that exceeded the expectations of OPEC and its members.

News of the advance payment deal—the first of its kind in Iraqi history—first emerged last November.

Iraq’s oil marketing company, SOMO

Iraq’s oil marketing company, SOMO, sought a five-year prepayment deal that was supposed to start in January 2021 and end in December 2025. 

“Prepaid oil cargoes are part of an urgent plan to boost state budget and overcome the financial crisis.

We have obligations towards OPEC to cut output, we have to repay foreign companies debts and also to keep our economy standing and this is why we need cash in advance for some of our oil sales,” an oil ministry official told the news agency.

The size of the five-year deal was $2 billion, and it was sealed with Chinese Zhenhua,
a division of state-owned defense corporation Norinco.

Norinco operates a 120,000-BPD refinery, so the deal was quite positive for Zhenhua as it allowed it to lock in low oil prices for the next five years.

If the deal is canceled, however, Iraq could lose a prospective buyer for its crude if it needs to resort to advance payment deals again.

 

Development In Oil Supply Rates

Crude oil imports from India to Canada and the United States accounted for 11% of India’s crude oil imports in January
– a record number of North American crude oil for the world’s third-largest oil importer, according to Reuters.

India’s total imports of crude oil in January were around 4.8 million barrels per day,
down from a three-year high in December.

In December 2020

In December 2020, it is estimated that India’s imports of crude oil increased by 29% compared to November,
and 11.6% compared to December 2019, to more than 5 million barrels per day.

This was the highest import level in three years.

 

In January

In January, India’s imports decreased since December,
but the demand for crude oil from the United States and Canada rose with the increase in demand for gasoline.

Despite the decrease in the Middle East’s share of India’s imports to 61%, its lowest level in eight months,
due to reduced supplies from the largest suppliers, Iraq and Saudi Arabia,
which limited some exports as part of the OPEC agreement.

India’s imports from the United States gradually doubled to 367,000 barrels per day in January,
making India the fourth-largest supplier of crude oil after Iraq, Saudi Arabia, and the United Arab Emirates.

In recent months, and at a time when the largest OPEC producers committed to reducing global crude supplies as part of the OPEC agreement.

India has been supplying more and more oil in immediate deals with exporters outside the Middle East.

Indian refiners have also boosted imports from exporters such as the United States and Nigeria,
which produces the Organization of the Petroleum Exporting Countries (OPEC) in West Africa, which sells lighter grades of crude.

 

“Oil Prices Sudden Increase In US Inventories”