Oil Under Pressure As EIA Confirms Rising Crude, Fuel Inventories

Crude oil prices moved lower today, after the U.S. Energy Information Administration reported an estimated inventory build of 1.2 million barrels for the week to May 31.

The change compared with a decline of 4.1 million barrels for the previous week, which failed to move prices higher because it came in the company of fuel inventory builds in both gasoline and middle distillates.

The EIA estimate follows the American Petroleum Institute’s reporting a crude oil inventory build along with builds in fuels. The inventory change was unexpected and pressured oil prices, down since the start of the week, further.

In fuels, the Energy Information Administration reported inventory builds for the last week of May.

In gasoline, the authority estimated an inventory increase of 2.1 million barrels, with production averaging 9.5 million barrels daily during the reporting period.

This compared with an inventory build of 2 million barrels for the previous week, with production averaging 10 million bpd.

In middle distillates, the EIA reported an inventory build of 3.2 million barrels for the week to May 31, with production standing at an average 5.1 million barrels daily.

This compared with an inventory build of 2.5 million barrels for the previous week, when middle distillate production averaged 5 million barrels daily.

Oil prices, meanwhile, remain depressed, at the lowest level in four months. The slump followed the latest OPEC+ meeting last weekend, which produced the news that some of the production cuts the group agreed last year may be reversed later this year. The possibility, conditioned on the right market environment, was taken by traders to mean a guaranteed surplus and a selloff followed.

"Brent remains under pressure as a corner of the market continues to view OPEC's proposed taper timeline for the voluntary cuts as a binding commitment to increase by 500,000 barrels per day in Q4 2024 irrespective of the fundamental oil outlook or sentiment come summer's end," RBC Capital Markets’ Helima Croft said in a note, as quoted by Reuters.

The oil inventory build estimated by the API also helped bring prices lower and keep them there.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

• Oil Price Plunge Hits BP and Shell Shares
• What Does OPEC’s Strategy Shift Mean for the Oil Market?
• Saudi Aramco’s $12 Billion Share Sale Quickly Sells Out, but Who is Buying?