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Oil Prices Rebound On Crude, Gasoline Inventory Draws

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The Energy Information Administration reported a large crude oil draw of 4.1 million barrels for the week to June 8, after a 2.1-million-barrel increase a week earlier.

A day earlier, the EIA said in its latest Short-Term Energy Outlook that in May, oil production in the United States averaged 10.7 million bpd, forecasting the average for 2018 at 10.8 million bpd. That’s up from 9.4 million bpd in 2017.

For gasoline, the authority estimated a 2.3-million-barrel draw in inventories, with the average daily production at 10.5 million barrels, versus a hefty 4.6-million-barrel build and daily production of 9.7 million barrels a week earlier.

Distillate inventories last week were down by 2.1 million barrels, which compares with a build of 2.2 million barrels in the prior week. Distillate production in the week to June 8 averaged 5.1 million barrels daily, versus 5.3 million bpd in the previous two weeks.

The EIA report follows API’s estimate of a moderate build of 800,000 bpd in crude oil inventories, which fell short of analyst expectations for a draw of 2.74 million barrels. It also comes amid reports that both Russia and Saudi Arabia are now exceeding their production quotas ahead of the June 22 meeting of the OPEC+ club. Related: Can Saudi Arabia Prevent The Next Oil Shock?

The latest update from that camp is that Russia may offer its partners a return to production rates from October 2016, which most participants in the cut deal took as a basis for the cuts. Russia itself agreed to cut 300,000 bpd from its October production average, which was a record 11.2 million bpd.

Adding to headwinds, Reuters reported earlier today that crude oil in floating storage in Europe had hit an 18-month high, at 12.9 million barrels, or over a quarter of global floating oil storage.

At the time of writing, West Texas Intermediate traded at US$66.03 a barrel and Brent crude was at US$75.83 a barrel.

By Irina Slav for Oilprice.com

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