Small Crude Build Sends Oil Lower

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June 12, 2019//-Crude oil price fell further today after the Energy Information Administration reported another build in inventories at 2.2 million barrels for the week to June 7.

This compares with a build of 6.8 million barrels a week earlier that combined with a 3.2-million-barrel build in gasoline inventories as well to push prices lower.

Last week, gasoline inventories added 800,000 barrels, according to the EIA, despite driving season presumably gathering pace. Gasoline production averaged 10.3 million barrels daily last week, compared with 10 million bpd a week earlier.

The inventory report comes amid plunging oil prices as the market holds its breath for OPEC+’s decision on oil production cuts, namely, whether they will extend the cuts until the end of the year.

There is also persistent uncertainty about demand trends as the U.S.-Chinese trade war continues to escalate. The latest update here came from President Trump, who threatenedtariffs on another US$300 billion worth of Chinese goods if China’s President Xi Jinping does not make an appearance at a scheduled bilateral meeting during the G20 summit later this month in China.

A day earlier, the EIA released its latest Short-Term Energy Outlook, in which it revised its average price projections in tune with the latest price developments. Now, the authority expects Brent crude to average US$67 a barrel, down from US$69 a barrel forecast in the May edition of the STEO.

At the time of writing, Brent crude was trading at US$61.06 a barrel, with West Texas Intermediate at US$52.07 a barrel, both down by more than a percentage point from the opening of trade today.

By Irina Slav for Oilprice.com

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