Oil prices steady despite increased US gasoline, diesel stocks
Oil prices ended the day up after a seesaw session on Wednesday. Anadarko photo.
Oil prices dip early in trading, but recover throughout the day
Brent oil prices retreated from three-week highs reached earlier on Wednesday, but recovered throughout the trading day, despite a decline in US refining runs and an unexpected increase in gasoline and diesel inventories.
Brent rose 27 cents to $58.15/barrel by 4:06 p.m. EDT and US WTI was up 7 cents to $52.33/barrel. Western Canadian Select rose 51 cents to $40.40/barrel.
Oil prices had risen in recent days as unrest in Iraq and Iran raised risk premiums.
Tensions in Kurdish territory in northern Iraq have boosted oil prices on concerns that Turkey would shut down a crude pipeline, cutting off shipments of Kurdistan-area crude to Turkish ports.
Normally, the pipeline accommodates 600,000 b/d of crude flows, but recently shipments have dropped off to about 225,000 b/d, according to a Reuters shipping source.
“It remains to be seen whether the Kurds, after withdrawing from the region they claim to be entitled to, will allow crude oil to be transported by pipeline across their territory to the Turkish Mediterranean port of Ceyhan,” Commerzbank analysts told Reuters.
In the Middle East, Iraq is not the only area where tensions are high. US President Donald Trump refused to certify Iran’s compliance in the multi-nation nuclear deal, despite others involved in the agreement reporting Iran is following the terms of the deal. Congress now has 60 days to decide on further action against Iran.
Under previous sanctions, about 1 million b/d of Iran’s oil was cut from global markets.
On Wednesday, the US Energy Information Administration released data showing a decline in US crude stocks of 5.7 million barrels, higher than analysts had anticipated.
Under their fall maintenance schedule, refiners cut activity and overall refining runs fell off last week; refining output fell to 84.5 per cent, the seasonally slowest output rate since 2011. Gas and diesel inventories rose, boosting concerns about high inventories at a time when demand for petroleum products declines.
“A setback in refinery utilization rates occurred as refiners undergo seasonal maintenance,” Anthony Headrick, energy market analyst at CHS Hedging LLC Told Reuters. “Builds in refined products and a setback in refined product demand provides weight to the energy complex.”
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