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Oil Rallies On Small Crude Inventory Build

As the effect of the coronavirus epidemic begins to recede and oil prices start to recover, the Energy Information Administration reported a crude oil inventory build of 400,000 barrels for the week to February 14, hardly affecting the tentative bullishness.

A day earlier, the American Petroleum Institute reported an estimated inventory build of 4.16 million barrels, which made prices falter. Analysts, for their part, had expected the EIA to report an inventory build of 3.767 million barrels, adding to a hefty 7.5-million-barrel increase reported for the previous week.

For the week to February 14, the EIA also reported a 2-million-barrel decline in gasoline stockpiles, with production averaging 9.5 million bpd. A week earlier, gasoline inventories shed a modest 100,000 barrels, with production averaging 9.2 million bpd.

In distillate fuels, the EIA reported a decline of 600,000 barrels, with production at 4.9 million bpd. This compared with an inventory draw of 2 million barrels for the previous week and a production rate of 4.8 million bpd.

A day before its weekly petroleum status report, the EIA revised down its forecast for global oil demand for this year, adding pressure to prices. It was not a small revision, either: at 378,000 bpd it beats both OPEC’s and the International Energy Agency’s downward demand outlook revisions.

At the time of writing, Brent crude was trading at $59.33 a barrel, with West Texas Intermediate at 54.39 a barrel both up by more than a percentage point from yesterday’s close. The international benchmark has hit a seven-day streak of gains, propped up by reports that suggest the coronavirus epidemic may have begun to ebb away.

Yesterday, an announcement of U.S. sanctions against the trading arm of Russia’s Rosneft for its business ties to Venezuela also helped oil prices. Yet the situation remains precarious: any news of more production anywhere in the world could depress the benchmarks again.

By Irina Slav for Oilprice.com

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