The US Energy Information Administration’s weekly petroleum status report shows that the US commercial crude inventory fell by 6.2 million barrels in the week ending November 18th. Crude oil in commercial storage now totals 30.8 million barrels, still slightly above the average 5-year range. Analysts had been expecting a gain of around 500,000 barrels.
WTI crude prices have fallen more than $2/barrel today, currently posting a price of $95.91/barrel. The drop in price is more likely due to expectations of lower demand from Europe as the continent continues to wrestle with its financial crisis.
US gasoline inventories rose last week by 4.5 million barrels. That’s about 2 million barrels higher than at the same time last year. We noted yesterday that pump prices have been falling even though Thanksgiving holiday travel is expected to increase by 3%-5% over last year. It could well be that rising gasoline inventory is playing a role. Analysts had been expecting a rise of about 1 million barrels in the US gasoline inventory.
The differential between WTI and Brent crude has widened again, now standing at about $11/barrel, but the Brent price is trending downward while the WTI price is trending upward. That could partly explain why the price of gasoline is also falling, because gasoline is priced based on Brent crude. Until the two prices converge, the trend in Brent will have more influence on gasoline prices than will the price of WTI.
Paul Ausick
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