USA crude oil inventories continue to decrease in week to May 11

Lloyd Doyle
May 17, 2018

However, sometimes slogans can become an embarrassment as Drill, Baby, Drill turned to Spill, Baby, Spill following the 2010 Deepwater Horizon oil spill at a British Petroleum offshore drilling rig in the Gulf of Mexico.

Greater GDP growth has the potential to increase oil consumption beyond forecasted levels, which could put upward pressure on crude oil prices, and simultaneously drive systemic market movements in equities, bonds, and other commodities, which are often correlated with movements in crude oil prices.

"In these early days, there is understandable uncertainty about its potential impact on Iran's oil exports, which are now about 2.4 mb/d", the IEA noted.

The IEA reported that "Global oil demand growth for 2018 has been revised slightly downwards from 1.5 mb/d to 1.4 mb/d".

Opec and its allies have finally succeeded in their 16-month campaign to clear a global oil glut, with inventories falling below their five-year average for the first time since 2014, the agency said.

Crude oil prices turned lower in early Wednesday trading after the International Energy Agency said the market was creating economic headwinds. The country has been buying around 300,000 b/d so far this year.

Brent for July settlement rose as much as $0.90 to $80.18/bbl on the London-based ICE Futures Europe exchange, the highest since November 2014, and traded for $79.79.

US crude inventories C-STK-T-EIA dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.

The data poses worries that near-record high refinery runs may be short-lived.

Chinese refineries processed 12.13 million bpd in March, beating the previous record of 12.03 million bpd from November 2017. Crude oil inventories (-1.4m vs. -2.0m expected) were better than expectations. The agency that has consistently underestimated global oil demand is once again trying to keep their weak demand illusions in the spotlight.

Barkindo said the participating countries have demonstrated unwavering dedication to achieving the rebalancing of the global oil market, as demonstrated by the high conformity level of 149 per cent.

Elsewhere, supply concerns have been mounting over the last week after President Donald Trump pulled the United States of America out of the Iran nuclear deal - a move that reimposes sanctions on Iranian oil.

Iran's oil buyers continue to buy its crude, assessing the implications of the sanctions during the 180-day wind-down period.

Still, "we don't expect China to reduce its imports of crude from Iran given their long-term signed contracts and the ability to pay in yuan", said Abhishek Deshpande, the head of oil market research & strategy at J. P. Morgan.

Markets are set to tighten further as output sinks in Venezuela and the United States re-imposes sanctions on Iran.

These ruminations may presumably cause those keenly attuned to the cycles of a free market to wonder what the fuss is about: if the IEA's prediction of supply growth comes true, it would be the antidote to the high crude prices it is anxious about; and if a sudden tightening of supplies comes true and prices spike even higher, then OPEC and other countries seem ready to bring more product to the market.

Other reports by Iphone Fresh

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