Crude oil prices rose today after the Energy Information Administration reported a crude oil inventory decline of 700,000 barrels for the week to May 8.
In gasoline, the EIA reported an inventory draw of 3.5 million barrels, after a draw of 3.2 million for the previous week, which sparked hopes for demand recovery. Gasoline production last week averaged 7.5 million bpd, versus 6.7 million bpd a week earlier.
In distillate fuels, the EIA reported an inventory rise of 3.5 million barrels for last week. A week earlier, distillate fuel inventories had added 9.5 million barrels, with production at 5.1 million bpd. Last week, distillate fuel production averaged 4.9 million bpd.
Refineries processed 12.4 million barrels of crude daily last week, the EIA also said, operating at 67.9 percent of capacity. This compared with average daily run rates of 13 million barrels of crude, with refineries operating at a little over 70 percent of capacity.
This week saw a host of European countries begin reopening their economies, which had a beneficial effect on oil prices. However, the effect may be short-lived until it becomes clear exactly how fast the recovery in demand is going. U.S. oil prices also benefited from Saudi Arabia’s announcement it would deepen its oil cuts by another 1 million bpd.
At the time of writing, West Texas Intermediate was trading at $25.42 a barrel, with Brent crude at $29.83 a barrel, both slightly down from yesterday. Meanwhile, some U.S. producers have said they would start ramping up production at $25 for a barrel of WTI despite the fact that the huge global inventory overhang remains. If they stick to their word, the problem will only become graver and will pressure prices yet again, putting much of the U.S. oil industry in a vicious circle.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Has Demand For Oil Already Peaked?
- Bullish Sentiment Is Creeping Back Into Oil Markets
- Battery Metal Demand Set To Soar By 500%