Investing.com -- Crude oil stockpiles dropped more than expected last week thanks to a plunge in weekly crude imports, according to the Energy Information Administration.
Inventory declined 7.5 million barrels for the week ending July 11. Analysts tracked by Investing.com had expected a draw of 2.1 million barrels. Stockpiles rose 5.6 million barrels the previous week.
On Tuesday, industry group American Petroleum Institute, in a snapshot of its own inventory estimates released ahead of the official EIA numbers, said crude inventories probably declined 8.2 million barrels last week.
"The OPEC, or more precisely Saudi, clampdown on U.S.-destined cargoes is really showing with the 1.8-million barrels per day plunge in the EIA number for crude imports last week," said Investing.com oil expert analyst Barani Krishnan. "Refiners are also not letting up with their gasoline and distillates production, hiking gasoline output to 9.1 million bpd and distillates to 4.9 million."
"The combined effects led to the outsized crude draw," Krishnan said. "The price action is somewhat restrained and that’s a function of the OPEC meeting, where everyone’s waiting to see if the cartel will roll back production cuts. A two-million barrel reduction in OPEC cuts could go a long way in negating the weekly crude draws seen in the U.S., particularly if the Saudis start sending more of their cargoes this way."
Aside from the Saudis, the disconnect between the second Covid-19 wave and refiner processing of crude continues, Krishnan said. “The refiner community seems to be ignoring the possibility of more clampdowns ahead, and they are literally stepping on the gas in putting out more fuel products in anticipation of demand that may not come in the way they think."
Oil stored at the Cushing, Oklahoma, facility rose 949,000 barrels, against expectations for a build of 1.78 million barrels.