Oil prices were mixed in volatile trading on Aug. 26 after a huge drawdown in U.S. crude stockpiles was countered by a larger-than-expected build in gasoline and distillates, which include diesel.
Crude inventories fell 5.5 million barrels in the week to Aug. 21, the biggest one-week decline since early June, according to government data that countered analysts' expectations for an increase of 1 million barrels.
But gasoline stocks rose 1.7 million barrels, compared with forecasts for a 1.3 million-barrel drop. Distillates climbed 1.4 million barrels, versus expectations for a 1.0 million barrels increase.
Despite the drop in crude stocks, which was in line with a report late on Aug. 25 from industry group the American Petroleum Institute, U.S. oil prices whipped lower on the data.
"The products builds are overwhelming the constructive crude draw," said Scott Shelton, commodities specialist at ICAP in Durham, North Carolina.
U.S. crude's front-month contract was down 25 cents at $39.06 a barrel by 12:03 p.m. EDT (1603 GMT).
The front-month in Brent, the global oil benchmark, was up 7 cents at $43.28.
Gasoline tumbled for a third straight day to 8-month lows, down 5 percent for the session and 12 percent for the week. Gasoline's crack, or premium that refiners make from turning a barrel of crude into the fuel, fell to its lowest in six months.
Oil has lost a third of its value since June on high U.S. production, record crude pumping in the Middle East and concern about falling demand in Asian economies.
On Aug. 24, both crude oil benchmarks saw their lowest trades since early 2009, dropping as much as 6 percent in one session after heavy falls in equity markets.
Some analysts also said the latest decline in crude stocks may have been an aberration driven by a brief dip in imports. Most are bracing for a sustained rise in stocks in coming months as U.S. refiners shut for seasonal work.
"We had a draw, but the market needs to see weeks of that to be convinced," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.
Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York, concurred.
"We feel today's numbers are not the start of a new trend. In a few weeks from now, we will look back at this draw as a one off," Zahir said, citing the end of the U.S. summer driving season and record pumping of OPEC crude.
Recommended Reading
Chevron’s Tengiz Oil Field Operations Start Up in Kazakhstan
2024-04-25 - The final phase of Chevron’s project will produce about 260,000 bbl/d.
Rhino Taps Halliburton for Namibia Well Work
2024-04-24 - Halliburton’s deepwater integrated multi-well construction contract for a block in the Orange Basin starts later this year.
Halliburton’s Low-key M&A Strategy Remains Unchanged
2024-04-23 - Halliburton CEO Jeff Miller says expected organic growth generates more shareholder value than following consolidation trends, such as chief rival SLB’s plans to buy ChampionX.
Deepwater Roundup 2024: Americas
2024-04-23 - The final part of Hart Energy E&P’s Deepwater Roundup focuses on projects coming online in the Americas from 2023 until the end of the decade.