Crude oil prices drifted lower today after the Energy Information Administration reported an oil inventory build of 3.3 million barrels for the week to October 29 and as the market frets about the potential tapering of the Fed’s asset purchases that could slow growth and reduce appetite for riskier inflation-hedge assets such as crude futures.
This compared with a build of 4.3 million barrels that paused the oil price rally last week. The authority also reported mixed results in gasoline and middle distillates. In gasoline, the EIA estimated an inventory decline of 1.5 million barrels for the seven days to October 29, with production averaging 10.2 million bpd.This compared with a stock draw of 2 million barrels for the previous week and average daily production of 10.1 million bpd.
In middle distillates, the EIA reported an inventory build of 2.2 million barrels for the week to October 29. This compared with a decline of 400,000 barrels estimated for the previous week.Production of middle distillates averaged 4.8 million bpd last week, which compared with 4.6 million bpd a week earlier.
WTI Crude was down 2.11% at $82.14 and Brent Crude traded down 1.89% at $83.10, as the market expects the Fed to announce later today the start of tapering of the asset purchase program because of increased concern over inflation, according to economists polled by Bloomberg.
The U.S. dollar strengthened before the Fed’s announcement, further weighing on oil prices as a stronger dollar makes crude more expensive for holders of other currencies. Additionally, oil prices fell following another crude oil inventory build estimated by the American Petroleum Institute (API).
Oil prices were down at the time of writing after the American Petroleum Institute estimated a crude oil inventory build of almost 3.6 million barrels. This was the sixth consecutive inventory build estimate by the API.