The Fundamental Analytics Team
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Crude oil prices recovered somewhat after the Energy Information Administration (EIA) reported an inventory decline of 2.5 million barrels for the week of May 10. This inventory change comes after a modest draw of 1.4 million barrels for the previous week and an unexpected decline of 3.1 million barrels for the week to May 10, as estimated by the American Petroleum Institute. This came alongside an inventory buildup of 900k barrels for the previous week, which depressed oil prices as traders took it as a sign of lukewarm demand. Production during the previous week averaged 13.1 million barrels per day and remained unchanged for the 10th week straight, the biggest streak in history. This could raise significant concerns for an oversupply of the market, as the EIA revised down its estimates for global oil and liquid fuels consumption compared to the previous week. The EIA now expects global oil and liquid fuels consumption to grow by 920k bpd this year to 102.84 million bpd, slightly smaller than the 95k bpd growth forecast in its April STEO. |
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Figure 1: NYMEX WTI crude oil front month; EIA crude oil inventories (yearly change). Elsewhere, the latest OPEC report indicated that member countries exceeded their production cap by 568k bpd in April, but maintained solid demand projections of 2.25 million bpd in 2024 and 1.85 million bpd in 2025. Moreover, soft US inflation data for April bolstered the market’s expectations that the Federal Reserve will start cutting interest rates in September, boosting the demand outlook. |