WTI crude oil traded below $78 today after the U.S. Energy Information Administration reported an estimated inventory increase of 1.8 million barrels for the week to May 17.
This compared with a draw of 2.5 million barrels for the previous week that pushed benchmarks higher last week as it came after an API estimate that also pointed to a draw and it was the second weekly draw in a row, suggesting demand picking up.
A day before the EIA released its report, the American Petroleum Institute estimated sizeable builds in crude and fuels for the week to May 17, with oil adding 2.48 million barrels and gasoline stocks rising by 2 million barrels.
According to the Energy Information Administration, gasoline inventories shed 900,000 barrels in the week to May 17, with production averaging 10 million barrels daily.
This compared with a draw of 200,000 barrels for the previous week, when production averaged 9.7 million barrels daily.
Middle distillate stocks rose by 400,000 barrels in the week to May 17, with production averaging 5.1 million barrels daily.
This compared with a minor inventory decline for the previous week and a production rate of an average 4.8 million barrels daily.
The EIA report may contribute to oil market sentiment already dominated by pessimism about consumption after the latest signals from the Fed, which essentially come down to extra caution with regard to rates.
In short, the Fed has no intention of cutting these in the immediately observable future, waiting for inflation to come down closer to its target of 2%. Fed officials made this clear this week, as they advised the ultimate decision makers to refrain from rate cuts for at least another few months, Reuters reported.
Oil prices have been trending down since the start of the week, meanwhile, on the back of grim demand expectations because of persistently high interest rates. The API’s Tuesday report on inventories reinforced the decline, too.
