EIA crude inventories unexpectedly fell by 2 million barrels, and U.S. oil jumped $0.4 in the short term

On Wednesday (November 17) New York session, at 23:30 Beijing time, data released by the U.
S.
EIA showed that U.
S.
commercial crude oil inventories excluding strategic reserves unexpectedly fell in the week ended November 12, and were less than the previous market expected growth, refined oil inventories and gasoline inventories declined
.
U.
S
.
crude oil prices jumped $0.
4 short-term after EIA data.

EIA crude oil inventories unexpectedly declined

Specific data showed that the EIA crude oil inventory change in the United States for the week ended November 12 actually decreased by 2.
101 million barrels, an expected increase of 1.
2 million barrels, and an increase of 1.
002 million barrels
in the previous month.

In addition, EIA gasoline inventories in the United States actually decreased by 707,000 barrels in the week ended November 12, compared with an expected decrease of 750,000 barrels and a decrease of 1.
555 million barrels in the previous month; EIA refined oil inventories in the United States actually decreased by 824,000 barrels in the week ended November 12, compared with an expected decrease of 1 million barrels and a decrease of 2.
613 million barrels
in the previous month.

U.
S.
crude exports rose 573,000 b/d to 3.
626 million b/d
last week, according to the EIA report.
The four-week average supply of U.
S.
crude products was 20.
187 million b/d, up 3.
9%
from a year earlier.
U.
S.
domestic crude oil production fell by 100,000 barrels per day to 11.
4 million b/d
last week.

Commercial crude excluding strategic reserves imported 6.
191 million b/d last week, up 83,000 b/d
from the previous week, the EIA report showed.
Commercial crude inventories, excluding strategic reserves, fell by 2.
101 million barrels to 433 million barrels, down 0.
5 percent
.

EIA Cushing, Oklahoma, crude inventories in the United States increased by 216,000 barrels in the week ended November 12, the first inventory increase
since the week of October 1, according to the EIA report.
U.
S.
crude oil exports for the week ending November 12 were the highest
since the week of July 9, 2021.
EIA crude inventories in the United States fell by the week of November 12 at the largest rate since the week
of September 17, 2021.

OPEC expects the global oil market to experience a glut as soon as next month

The Organization of the Petroleum Exporting Countries (OPEC) said that as the post-pandemic economic recovery stalls, the global oil market will go from undersupply to oversupply as soon as next month
.

OPEC Secretary-General Mohammad Barkindo said the outlook meant it was reasonable
for OPEC to increase production at only a modest pace.
The comments again show that OPEC and its partners will continue to resist U.
S.
pressure to accelerate production increases and will stick to earlier tactics
at their meeting early next month.

Barkindo told reporters in Abu Dhabi on Tuesday that the recovery is fragile and these uncertainties further strengthen our resolve
to hold the wheel firmly.

Barkindo said OPEC and its allies — the 23-nation alliance led by Saudi Arabia and Russia — would be very cautious
about increasing production.
He echoed Saudi Energy Minister Abdulaziz bin Salman, who said this week that oil inventories would pick up
again starting next month.

Barkindo said we've seen inventory recovery for six weeks in a row, and our decisions are data-driven and we have to be very cautious
.

The IEA believes that the oil price rally is coming to an end as production picks up

The International Energy Agency (IEA) said tensions in the global oil market, which pushed oil prices to seven-year highs, have begun to ease
as production picks up in places like the United States.

According to the IEA's monthly report, demand growth remains strong, but supply is catching up, and changes in oil inventories in October suggest "trends may be shifting.
"
If this prediction is correct, it will bring great comfort
to consumers who have been hit hard by rising prices.

The IEA said in its monthly report that the world oil market remains tight by all measures, but a moderation of price increases may already be in sight, and U.
S.
production is increasing
along with higher oil prices.

Global refineries will process 80 million barrels per day of crude oil this month, up nearly 3 percent from October and well above quarterly averages
in the first three quarters of the year, according to the Paris-based advisory firm for energy-consuming countries.
Next month, another 800,000 barrels
per day will be processed.

To some extent, refinery equipment maintenance ends at this time of year, so an increase in crude oil processing is expected
.
However, data from the International Energy Agency shows that refined product inventories are expected to decline
this quarter, despite increased crude oil processing.
This suggests that the supply and demand situation will not deteriorate
significantly in the short term.

The IEA is likely to look longer to support its pricing view
.
Brent crude futures are currently the January contract, and the largest position in West Texas Intermediate (WTI) is also the January contract
.
Several agencies, including the International Energy Agency, expect oil production to begin to exceed demand
if OPEC+ producers increase production as planned.

Global oil production increased by 1.
4 million barrels per day last month, and will increase again
in November and December as oil supplies suspended by Hurricane Ida in the Gulf of Mexico resume.
U.
S.
shale oil drillers are also taking advantage of rising prices to boost production
.
The IEA said that as OPEC+ continues to resume exports suspended during the pandemic, these increased production will be put to market
.

Even without the deployment of the Strategic Petroleum Reserve, the United States is leading the supply rebound
.
The IEA raised its U.
S.
fourth-quarter production forecast by 300,000 barrels per day and raised its forecast for next year by 200,000 barrels
.
U.
S.
production will increase by 1.
1 million barrels per day in 2022, accounting for 60%
of production growth outside OPEC+.
The overall global supply and demand forecast for this year and next is largely unchanged
.

The market expects the release of strategic crude oil reserves by the United States, which puts pressure on the short-term trend of oil prices

Biden is facing increased pressure from party members to release oil from the Strategic Petroleum Reserve SPR to suppress rising oil prices
.

Marshall Steeves, an energy market analyst at IHS Markit, said crude oil futures sold off on market expectations that the Biden administration may consider releasing strategic crude oil reserves and the United States may ban crude oil and gasoline exports
.
Democratic U.
S.
Senate leader Schumer pushed for the release of strategic crude oil reserves
over the weekend.

Schumer said on November 14 that the Biden administration should release strategic crude oil reserves to lower gasoline prices
as the shopping season approaches.
Steve believes that the release of the Strategic Crude Oil Reserve is likely to be the most likely scenario
.
Nevertheless, since the release of strategic reserve crude oil represents only a small fraction of global production and consumption, the impact will be
short-lived.
In addition, this will be a one-time event, not a continuous increase
in production.
The push to release strategic crude oil reserves is likely to be driven by political considerations, resulting in a brief drop in prices during the shopping season
.

John Kilduff, founding partner of Again Capital, said that earlier in the day, the Biden administration's expectation that the Biden administration may release strategic crude oil reserves to fight inflation weighed on oil prices, but the market's suspicion of the US operation caused US crude oil futures prices to rise
.
Kilduff believes that market prices seem to have reacted too aggressively to the possibility of the United States releasing strategic crude oil reserves
.

RystadEnergy analyst Louise Dickson said the market looked less worried about the current tight supply, with traders instead focusing on the resurgence of other bearish factors, namely a possible increase in oil supply and a rebound
in the number of coronavirus infections.

If the SPR is not released, oil prices will continue to rise
.
Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said that at the current point, the market has factored most of the release of crude oil reserves into the price, and over time, if the crude oil reserves are not released as expected, oil prices may rise sharply
.

As the U.
S.
considers releasing crude supplies, Saudi Arabia and the United Arab Emirates said OPEC would continue to carefully plan to increase production
.
The group is adding 400,000 barrels a month, but OPEC members have not so far reached that level
in actual production, according to the documents.

Oil prices soared to multi-year highs
as the economic recovery and the global energy crisis spurred oil demand.
OPEC and its allies are more concerned about the stability of
demand in the coming months.
The Biden administration's consideration of liberalizing crude oil reserves comes at a time when gasoline prices are at a seven-year high, which could affect Democrats
whose support is declining.

Gasoline prices in California, the nation's most populous state, hit a record high Monday
, according to the American Automobile Association.
Even Democratic senators who are concerned about climate change have urged the president to act quickly to curb oil prices
by using SPR or banning U.
S.
crude exports.

OPEC+ resisted U.
S.
calls for higher production and supported oil prices

According to reports, Saudi Arabia and the United Arab Emirates said that OPEC+ will continue to cautiously increase crude oil production and will not bow to pressure from the United States to increase production
.

It is reported that due to concerns that gasoline prices at the highest level in seven years will exacerbate inflation in the United States, US President Joe Biden has previously called for OPEC+ production to increase production to reduce crude oil prices
.
But OPEC+, led by Saudi Arabia and Russia, continues to add 400,000 b/d of capacity
per month.

Speaking at the Adipec oil and gas conference in Abu Dhabi, UAE Energy Minister Mazrouei said: "The 400,000 b/d increase in capacity per month continues and that should be enough
.
”

Mazrouei said the crude oil market will turn from supply shortage to excess early next year, which is one of
the main reasons why OPEC+ is not actively supplied.
"All we know, and what all the experts around the world say, is that there will be a glut
in the future," he said.
So we need to be calm
.
”

Saudi Energy Minister Abdulaziz bin Salman agreed
.
He said the crude oil market is calmer
relative to the coal and natural gas markets.
Coal and natural gas prices have surged to record highs
last month.

But Abdulaziz noted in an interview: "The crude oil market is not responsible
for energy shortages.
Energy market volatility comes from other energy sources and is much
more volatile.
”

In addition, crude oil inventories have declined
rapidly since the outbreak of the epidemic in early 2020 and OPEC+ began to cut production significantly.
But Abdulaziz said that number would pick up
from next month.
OPEC+ is fulfilling its responsibilities
to the oil market.

Finally, Omani Energy Minister Mohammed Al-Rumhy also said there was no need for OPEC+ to accelerate production
increases.
He noted that the group may decide at its December meeting to continue increasing production by 400,000 barrels
per month.