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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Edge Higher As U.S. Oil Inventories Fall Again

Amid fresh hopes that the extension of the OPEC production cut deal might actually do the trick, the Energy Information Administration reported a fresh draw in crude oil inventories for the week to May 12, at 1.8 million barrels.

A day earlier, the American Petroleum Institute had estimated commercial oil inventories went up by 882,000 barrels, in striking contrast to analyst expectations, which were very optimistic, for a draw of 2.3 million barrels. The EIA figures might go some way towards restoring optimism.

The EIA reported refinery runs at 17.1 million barrels per day, compared to 16.8 million bpd the week before, operating at 93.4 percent of capacity. Gasoline production averaged a bit over 10 million bpd, from 10.1 million bpd in the previous week. Inventories of the most popular fuel in the U.S. fell by 400,000 barrels. For the week to May 5, the EIA had reported a 200,000-bpd draw in gasoline stockpiles.

It seems that optimism about global supplies will not last long despite OPEC members’ assurances that the nine-month extension, to be officially announced at the group’s Vienna meeting next Thursday. EIA’s figures might help but, again, only temporarily, as doubts about the state of oil’s fundamentals abound. Related: Disruptive Tech: Electric Airplanes Could Destroy The Automotive Industry

In its latest Oil Market Report, for example, the International Energy Agency said that although OPEC and its partners had gone some way towards shrinking supply, there was more work to do and global inventories were unlikely to fall within the limits of the five-year average before 2018.

The agency warned that two exempt OPEC members, Libya and Nigeria, could boost their output significantly in the second half of the year, undermining production-cut efforts. Of course, U.S. shale remains the strongest headwind for prices, but there is also worry that if OPEC, Russia, and the other participating countries leave quotas at the current level, the stockpile drawdown will take longer. Some industry observers have suggested that it’s necessary to cut deeper, but it is unlikely that OPEC and its partners will agree to that.

By Irina Slav for Oilprice.com

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Leave a comment
  • Darrin on May 18 2017 said:
    I really believe all these articles are pure propaganda laced with a little bit of truth for the sole purpose of affecting the market!!!
  • Matt on May 21 2017 said:
    I cringe when I see these statistics. One never accounts for the 10,102 oil tankers at sea with a capacity of 543 million DWT of capacity or 4.6 (B)illion barrels total global storage capacity at sea. If there are 50 percent of the ships that are at capacity it equates to 2.3 billion gallons of oil in the ocean today! It takes approximately 144 ships to supply the entire united states importing just over 9 million barrels of oil per day for a year (calculations of imported fuel EIA data for 2015). If 144 ships can supply the entire US with 144 oil tankers, then what are the other 9,900 ships doing? This is s a simple math problem solved by the Tanker Delivery Rate. The US uses just over 23 percent of the world's oil. The other 77 percent is shipped to other countries by the other 9,900 ships. Your article saying that the rise in prices is due to a change in the inventory level is pure speculation. A decline in the "storage" from 2.3 billion barrels stored at sea (which nobody accounts for), and the other 540 million stored in the US is too speculative. For instance, all the shipping people would have to do is manipulate the ships coming into port for a week and the price rises. Once the general public finds out there is 2.3 billion barrels of oil stored at sea on top of the record amount stored in the US there will be a huge shift ideology. You could start your article with the elephant in the room, stating that the mere draw of 5 million barrels in comparison to a total of 3 billion barrels of total current storage would be a little more accurate and then make your argument that prices fell because of a .017 percent change in the inventory. Just for accuracy sake.
  • Jesse glenn on May 23 2017 said:
    Saudi arabia owns 40% of u.s. refineries and gas stations. They control who refines oil. Most u.s. oil producers are bottlenecking at the refineries. No matter what they say, has prices will rise, because everyone is focused on oil production, and not on who controls the refineries.... It's a new Saudi strategy.

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