Amid rising oil prices following President Trump’s withdrawal from the Iran nuclear deal, the Energy Information Administration added to the bullish sentiment by reporting a draw of 2.2 million barrels in U.S. crude oil inventories.
Analysts polled by IG had expected a moderate build of 160,000 barrels, while a Reuters poll suggested inventories would be down by 1.2 million barrels.
In the prior week, the EIA had reported a substantial build in crude oil stockpiles, which pressured prices, albeit moderately, even though it was coupled with yet another weekly increase in production and a surprise build in gasoline inventories.
In the week to May 4, gasoline inventories fell by 2.2 million barrels, the EIA reported, which compares with a 1.2-million-barrel increase a week earlier. Gasoline production averaged 9.9 million barrels per day last week, down from the prior week, when refineries produced 10 million bpd.
Distillate inventories were also down, by 3.8 million barrels, after a decline of 3.9 million barrels a week earlier. Distillate production last week averaged 5 million barrels daily, unchanged from a week earlier.
West Texas Intermediate was trading at US$70.91 a barrel at the time of writing, with Brent crude at US$76.93, both up by more than 2 percent after Trump’s Iran announcement.
U.S. oil production likely continued to rise, after hitting 10.62 million bpd two weeks ago. This should be bearish for oil but not in the current circumstances, with the market expecting a substantial drop in Iranian oil exports and with Venezuelan oil production at a 70-year low.
Even Saudi Arabia’s stated readiness to increase production to make up for any shortages resulting from the U.S. withdrawal from the Iran deal and the consequent sanctions is unlikely to have any palpable effect on oil prices right now.
By Irina Slav for Oilprice.com
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