AB Bernstein said global oil production increased by nearly 0.8 million barrels per day (bpd) in July, compared to the previous month, to 97.01 million bpd, while commercial inventories increased by 5.7 million barrels to 3.09 billion barrels in June.
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For July, Bernstein put Brent cracking margins at $3.02 per barrel (down $1.83 a barrel from June); U.S. Gulf Coast cracking margins at $5.06 a barrel (down $0.03); and Singapore cracking margins at $4.74 per barrel (down $1.03). “That’s over a million barrels a day more than it produced on average in 2015 and 2 million more than in 2014”.
High gasoline production means inventories are the highest on record for this time of year, keeping prices down at the pump.
The remarks helped send prices up more than four percent in NY, where a barrel of West Texas Intermediate for September delivery closed up US$1.78 at US$43.49, after having lost more than a dollar the day before.
Oil prices are still some 12.5 percent below their last peak in June as brimming storage tanks and production that exceeds consumption weighs on markets. At that, Brent was at the level of $44.05 and WTI at $41.71 a barrel.
In truth, those hopes had dissipated after the American Petroleum Institute (API) reported yesterday a 2.1mln barrels week-on-week increase in its measure of United States crude stockpiles.
On Wednesday, the American oil was quoted by $2.34 cheaper than the European analog (+$0.13 to US export potential on each barrel).
Even so, US gasoline futures RBc1 settled down more than 3 percent, for its biggest loss in a month.
“I’m surprised gasoline fell as much as it did today despite the good draw numbers”, said Pete Donovan, broker at Liquidity Energy in NY. Storage tanks worldwide are also almost full with oil products while refiner profits in Singapore have hit two-year lows. Prices of oil retreated slightly after reports of a new OPEC meeting sparked a rally.
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Matt Smith of ClipperData said the whipsawing of prices was “crazy”.
