• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 4 hours Solving The Space Problem For America’s Solar Industry
  • 1 day Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 2 days Investment in renewables tanking
  • 2 days If hydrogen is the answer, you're asking the wrong question
  • 1 day How Far Have We Really Gotten With Alternative Energy
  • 3 days "Mexico Plans to Become an Export Hub With US-Drilled Natural Gas" - Bloomberg - (See image)

WTI Crude Sheds 2% As Global Demand Concerns Weigh

Recession fears rose to the forefront again on Wednesday following a surprise build in U.S. crude oil inventories that has shaved over a dollar off Brent and WTI prices in afternoon trading.

On Wednesday at 1:45 p.m., Brent crude was trading down 1.86% at $76.00 per barrel, for a $1.44 loss on the day, while West Texas Intermediate was trading down 2.13% at $72.14 per barrel, for a loss of $1.57 on the day.

Despite the ongoing draws in gasoline and distillates, the market is interpreting the Energy Information Administration’s (EIA) data showing a larger-than-expected crude inventory build as an indication of weaker refinery runs. On Wednesday, the EIA reported a 3-million-barrel inventory build for the week to May 5. 

Despite the concerns about the health of the U.S. economy, Data from HFI Research shows that gasoline storage levels remain below the 5-year average ahead of driving season.

This week's surprise crude build hit the market particularly hard due to the comparison with last week’s inventory draw of 1.3 million barrels. However, U.S. crude oil inventories are still 1% below the five-year average for this time of year.

Last week, oil prices hit a 15-month low, though analysts largely seemed to be expecting demand to pick up with the summer driving season and prices to respond in kind, with higher prices near the end of this year. Also contributing to that medium-term optimism are production cuts by OPEC+ that took effect this month, shaving 1.6 million barrels per day off the market. The overriding sentiment is that supply will tighten later in the year as these cuts catch up to the market.

Fears of recession and U.S. bank collapses, however, continue to weigh on expectations, with data showing the extent to which traders and speculators fled oil in the week to May 2 based on these concerns.  According to that data, open interest in WTI is at a three-year low, adding to the oil price volatility. 

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News