U.S. crude oil inventories fell less than expected last week: EIA

by Ike Obudulu Posted on May 30th, 2019

Washington: U.S. crude stocks fell last week, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Thursday.

Crude inventories fell by 282,000 barrels in the last week, compared with analysts’ expectations for an decrease of 857,000 barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 16,000 barrels, EIA said.

Refinery crude runs rose by 189,000 barrels per day, EIA data showed. Refinery utilization rates rose by 1.3 percentage points.

Gasoline stocks rose by 2.2 million barrels, compared with analysts’ expectations for a 528,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 1.6 million barrels, versus expectations for a 564,000-barrel increase, the EIA data showed.

Net U.S. crude imports fell last week by 476,000 bpd.

Brent falls on trade war worries, tight oil market supports

Oil prices fell on Thursday on fears of a global economic slowdown due to a U.S.-China trade war but losses were capped by a tightening crude market and rising political tensions in the Middle East.

Brent crude futures, the international benchmark for oil prices, were at $69.03 per barrel at 1325 GMT, down 42 cents, or 0.6%, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 23 cents, or 0.4%, at $59.04 a barrel, supported by expectations of a fall in U.S. crude inventories.[API/S] [EIA/S]

“An escalating U.S.-China trade war represents a risk to oil markets,” Bernstein Energy said in a note on Thursday.

A senior Chinese diplomat ramped up the rhetoric against the United States on Thursday by comparing actions from Washington to “naked economic terrorism”.

Bernstein said that under “a full-blown trade war scenario” global oil demand would grow by just 0.7 percent this year, only half of current estimates.

Because of weakening demand, Bernstein said any upside for oil markets was capped despite relatively tight supply.

Oil prices have been supported in recent months by output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and other major producers as well as falling supplies from Iran.

Iranian May crude exports dropped to less than half of April levels at around 400,000 barrels per day (bpd) after the United States tightened sanctions on Tehran’s main source of income. Iran needs to export at least 1.5-2.0 million bpd of crude to balance its books.

“We see an abundance of escalation risks in large part because the U.S. sanctions are subjecting Iran to almost unprecedented economic pain,” said Helima Croft from RBC Capital Markets.

Arab leaders gather in Saudi Arabia on Thursday for emergency summits that Riyadh hopes will deliver a strong message to Iran that regional powers will defend their interests against any threat following attacks on Gulf oil assets this month.

Many analysts also expect the OPEC-led supply cuts to be extended until the end of 2019 as the group wants to prevent oil prices falling back to levels seen in late 2018 when Brent slumped to $50 per barrel.

Since OPEC and its allies started withholding supply in January, oil prices have risen by about 30 percent.

Why Markets Care About crude oil inventories (Crude Stocks, Crude Levels)

Crude Oil Inventories (Crude Stocks, Crude Levels) measures change in the number of barrels of crude oil held in inventory by commercial firms during the past week

It is released released weekly, 4 days after the week ends by the Energy Information Administration (EIA)

There is no consistent effect as there are both inflationary and growth implications. While this is a US indicator, it most affects the loonie due to Canada’s sizable energy sector.

Crude oil inventories (crude stocks, crude levels) is the primary gauge of supply and demand imbalances in the market, which can lead to changes in production levels and price volatility.

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