U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are in a position to finish mixed for the week based on Friday’s price action. Not only is this significant from a technical analysis standpoint, but because it highlights the divergence in concerns over rising U.S. supply and somewhat tighter Brent supply.
Brent is outperforming WTI this week because the supply issues are being generated by rising U.S. inventories and production. Brent supply is being controlled by the OPEC-led supply cuts and the U.S. sanctions against Iran and Venezuela.
Both markets, however, are being influenced by concerns that a weakening global economy will lead to lower energy demand.
Rising U.S. Supply Keeping Lid on Prices
Crude oil prices plunged on Wednesday after the EIA reported a weekly build in crude oil inventories of 6.8 million barrels. Traders were looking for a 1.7 million barrel draw down. The EIA also said that total stockpiles are now at 483.3 million barrels, 5 percent above the seasonal average.
The EIA report also showed gasoline stockpiles rose 3.2 million barrels during the week-ending May 31. This compares with a decline of 600,000 barrels a week earlier. Gasoline production averaged 10 million bpd last week, compared with 10.1 million bpd a week before.
Distillate fuels also rose. The EIA reported an inventory build of 4.6 million barrels, compared with a small draw of 200,000 barrels a week earlier. Refineries…