Oil prices pared losses Wednesday, despite the U.S. government reporting that crude inventories rose unexpectedly last week, as Saudi Arabia said Iran “sponsored” the attacks on its oil facilities.
WTI futures were down 1.3% on the day at $58.33 at 11:10 AM ET (15:10 GMT). They were down about 2% right before the inventory report was released.
London-traded Brent oil futures, the global benchmark, fell 0.9% to $63.98.
It’s been a wild week for oil following the attacks on Saudi Arabian infrastructure. Crude prices soared Monday, only to sharply fall Tuesday as Saudi officials said production could be up to 11 million barrels per day by the end of the month.
Today, a Saudi Arabian Ministry of Defense spokesman showed parts of missiles and drones from the attacks that he said were made in Iran, with the ministry asserting that the attacks were sponsored by that country, Bloomberg reported.
The EIA said this morning that oil inventories rose by 1.06 million barrels for the week ended Sept. 13, compared with expectations for a drawdown of 2.5 million barrels.Gasoline inventories rose by 780,000 barrels versus forecasts for a drop of 540,000 barrels. Distillate stockpiles increased by 440,000 million barrels, compared with forecasts for a rise of 535,000 barrels.
“We have the first across-the-board rise in U.S. inventories in four weeks,” analyst Barani Krishnan said. “Coming on the heels of the Saudi oil crisis, it raises the specter of all-out production from here on as every producer, from Aramco to Chevron (NYSE:CVX) and beyond, is going to ramp up on the excuse that supply might fall short anyway.”
Total U.S. crude production remained at 12.4 million barrels per day last week.
“The 1.1-million-barrel build in crude itself, notwithstanding the draw expected, isn’t earth-shattering considering that refinery runs fell 91% from 95% the week before, indicating that the early kick-in of maintenance season may be one reason (for the build),” Krishnan added. “Also, crude imports rose by more than 300,000 barrels, adding to the stockpile situation. But crude exports remain at a steady clip of above 3 million bpd, offsetting some of the bearish feel.”
“Overall, expect lots of volatility ahead as the market continues to digest how supplies adjust to demand in the coming weeks, and more importantly, how a wounded and enraged Saudi Arabia responds to Iran.”
