Oil Prices Slip As Inventories Increase Across The Board

A day after American Petroleum Institute estimated a solid build in gasoline inventories that pressured West Texas Intermediate, the Energy Information Administration added to the bearish mood by reporting a build in both crude oil and gasoline inventories for the week ending June 1.

Crude oil stockpiles, the authority said, rose by 2.1 million barrels in the week to June 1, versus a decline of 4.2 million barrels a week earlier. Gasoline stockpiles moved higher by 4.6 million barrels, compared with a 500,000-barrel build in the prior week. Distillate inventories added 2.2 million barrels, after a 600,000-barrel increase in the week before.

Refineries processed 17.4 million bpd of crude, the EIA also said, with gasoline production averaging 9.7 million barrels daily, down from 10.4 million bpd a week earlier. Distillate production stood at 5.3 million barrels daily, flat on a week earlier.

Crude oil prices have been mostly moving downwards since the start of the week although modestly, as worries deepen about Venezuela's currently unstoppable production decline and expectations about the same happening in Iran as U.S. sanctions begin to bite after a couple of months.

Meanwhile, the country's Supreme Leader scored an own goal by announcing a ramp-up of uranium enrichment capacity. The ramp-up will be within the limits set out in the JCPOA but it is still an alarming signal that Europe, which is trying to make sure it continues to buy Iranian crude despite the sanctions, might not be too happy to hear. Related: OPEC's Dilemma: Demand Destruction Or Production Boost

Elsewhere, reports emerged this week that President Trump had asked OPEC and Russia to lift its production by 1 million barrels daily as prices at the pump in the States hit three-year highs.

According to unnamed sources, cited by Bloomberg, Saudi Arabia and its Gulf partners were leaning towards a more modest increase, of about 300,000 bpd but Russia was more in favor of a bigger one, of 800,000 bpd. Other unnamed sources, however, told Reuters earlier Russia and Saudi Arabia were both aiming for an increase of 1 million bpd.

All these reports are fueling the volatility of oil prices that will remain heightened until at least June 22 when OPEC+ meets to discuss production.

By Irina Slav for Oilprice.com

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