Amid the ongoing fears of an escalating trade war between China and the United States, the Energy Information Administration countered the price decline potential of the China factor by reporting a crude oil inventory draw of 0.3 million barrels for the week to May 24.
This follows a build of 4.7 million barrels in the previous week, with the Wall Street Journal reporting earlier this week U.S. crude oil inventories right now are rising at the fastest pace since 2016 and pressuring prices.
In gasoline stockpiles, the authority reported a 2.2-million-barrel increase in inventories and an average daily production rate of 9.9 million bpd. This compared with an inventory build of 3.7 million barrels for the prior week, with a production rate of 9.9 million bpd.
In distillate fuel, the EIA reported an inventory draw of 1.6 million barrels, with production averaging 5.2 million bpd. Distillate fuel production a week earlier stood at 5.2 million bpd, with inventories adding 800,000 barrels.
Local production in the meantime continued rising even if shale producers are beginning to tighten their belts once again as cash flow remains elusive. This has served as an additional bearish factor for oil prices despite bullish signals from the OPEC+ group.
A meeting to discuss production in late June was recently rescheduled to accommodate Russia’s Energy Minister Alexander Novak, who, it was recently reported, had a scheduling conflict with the original dates. Now, the meetings for both OPEC and OPEC+ have been moved to next week, which has sparked concern about a growing divide within OPC and between OPEC and its largest external partner, Middle East expert Ellen R. Wald wrote for Forbes earlier this week. If the rout in the cartel persists, July could see a return to the pump-at-will approach.
At the time of writing, WTI was trading at US$58.68 per barrel, with Brent crude at US$67.27 a barrel.
By Irina Slav for Oilprice.com
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