Data that showed U.S. crude oil supply relative to refiner demand climbed to a 21-year high followed a warning by the International Energy Agency, the West’s oil-policy watchdog, that the market is facing weaker oil-demand growth and higher supplies. “The subdued growth rate of oil demand now looks increasingly entrenched in the face of high oil prices and weak economic growth,” the IEA said in its monthly global outlook.
That outlook followed a Tuesday report from the U.S. Energy Information Administration which sees only modest growth in oil-demand growth in the world’s biggest oil consumer this year after 2012 consumption hit a 16-year low. EIA’s latest weekly oil-inventory data show U.S. refiners trimmed crude-oil processing rates to a two-year low of less than 14 million barrels a day last week, amid maintenance work and operating snags at some facilities. At that same time, rising domestic output and imports lifted stocks by 2.6 million barrels last week, slightly ahead of expectations.
The combination of lower demand and higher supply means current inventories now are sufficient to cover 27.4 days of refiner needs, the highest level since 1992, and compared with the five-year average of less than 24 days of cover. The data snuffed out an early attempt to push a four-day, 2.3% rally in prices higher for a fifth day.