A day after the American Petroleum Institute surprised market yet again with a crude oil inventory draw, pushing prices up, the Energy Information Administration also reported an inventory decline, at 2.1 million barrels for the week to May 29.
At 532.3 million barrels, the authority said, crude oil inventories were 12 percent above the five-year average for this time of the year. Analysts had expected an inventory build of 3.3 million barrels, after last week the EIA reported a substantial inventory increase, at 7.9 million barrels, for the third week of May.
Last week, gasoline inventories rose, however, by 2.8 million barrels, following a modest draw of 700,000 barrels a week earlier. Gasoline production over the last week of May averaged 7.8 million bpd, up from the previous week, when the average was 7.2 million bpd.
In distillate fuels, the EIA reported an inventory build of 9.9 million barrels for the week to May 29. This was up from an inventory increase of 5.5 million barrels for the previous week. Distillate fuel production averaged 4.7 million bpd last week, compared with 4.8 million bpd a week earlier.
Refinery runs averaged 13.3 million bpd in the last week of May, compared with 13 million bpd a week earlier, signaling the continued improvement in fuel demand as the United States emerges from lockdowns.
Prices this week have been on the climb, even before the API reported its estimate of a crude oil inventory draw. At the time of writing, Brent crude was trading at $$39.36, after touching $40 for the first time in months yesterday, and West Texas Intermediate was changing hands at $36.87 a barrel.
There is growing optimism that the OPEC+ club will later this week agree to continue cutting production at the current rate of 9.7 million bpd even beyond the end-June deadline for the deep cuts. There is also optimism, although more guarded, about the global economy in the wake of the coronavirus pandemic. Both have contributed to a more bullish view on oil prices.
By Irina Slav for Oilprice.com
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