Oil prices have slumped to their weakest level since late June, with front-month prices and calendar spreads retreating sharply since the end of September. Some attribute the collapse to rising interest rates and a worsening global economic outlook, while others point to the limited changes in production and consumption. The drop in prices and spreads may be attributed to a short-covering rally and a squeeze on deliverable supplies that has since unwound. The market has returned to a more neutral state, with production restraint by Saudi Arabia and its OPEC⁺ partners being offset by continued growth in non-OPEC output and a downgraded outlook for global growth.
The American Petroleum Institute (API) reported a significant build of 12.940 million barrels in U.S. crude inventories, causing oil prices to drop. Gasoline inventories rose, while distillate inventories fell. The Strategic Petroleum Reserve (SPR) remained at a near 40-year low, with total purchases under the Biden Administration's buyback program being less than 4 million barrels. Cushing inventories decreased, and oil prices were trading down ahead of the API data release.
Crude oil prices rose as both the Energy Information Administration (EIA) and the American Petroleum Institute (API) reported significant inventory draws. The EIA reported a decline of 2.1 million barrels in crude inventories, while the API estimated a larger draw of 5.25 million barrels. Additionally, the EIA reported inventory declines in gasoline and middle distillates. Despite the recent dip, oil prices remain elevated, which could lead to higher gasoline and fuel costs, potentially accelerating inflation. The Federal Reserve's decision on interest rates may be influenced by the oil price jump and its impact on inflation.
The American Petroleum Institute (API) reported a surprise draw of 11.486 million barrels in U.S. crude inventories, compared to expectations of a 2.9 million barrel draw. This unexpected decline, along with China's economic activity, has led to an increase in oil prices. Gasoline inventories saw a build, while distillate inventories fell. The Strategic Petroleum Reserve (SPR) also saw a slight increase, but remains at a near 40-year low.
The American Petroleum Institute (API) has reported a smaller-than-expected draw of 2.418 million barrels on U.S. crude inventories, causing oil prices to close lower amid concerns over China's economic growth. Bearish sentiment has increased due to expectations of U.S. inventory levels, refinery maintenance slowing demand, and a slowdown in Chinese imports. Chinese economic data and JP Morgan's forecast of slowing demand for "mobility fuels" in China have further weighed on oil prices. The impact of Saudi and Russian output cuts has been offset by weakening crude demand from China, which is expected to continue throughout the summer.
US crude oil inventories unexpectedly rose by 3.618 million barrels, while gasoline inventories rose by 399,000 barrels and distillate inventories fell by 3.945 million barrels. US crude oil production rose by 100,000 bpd to 12.3 million bpd. Despite the surprise inventory build, the price of WTI and Brent crude oil were both trading up on Tuesday.
