Oil Prices Remain Lower Despite Tame Inventories Rise
Investing.com
Published May 06, 2020 10:28AM ET
Updated May 06, 2020 11:08AM ET
By Kim Khan
Investing.com - Oil prices shrugged off bullish weekly report on U.S. inventories Wednesday as traders took a breather after the mammoth recent rally.
WTI futuresfell 3.8% to $23.62 at 11:00 AM ET (15:00 GMT).
London Brent was down 4.4% at $29.62.
Oil inventories rose by 4.6 million barrels for the week ended May1, the EIA said. That compared with expectations for a build of about 7.8 million barrels, according to forecasts compiled by Investing.com.
Stocks at the national storage hub at Cushing, Okla., rose by 2.07 million barrels, the smallest increase in six weeks.
That continued the downward trend in inventory builds as economies around the globe begin to reopen and eased some worries about storage room in the U.S. that forced futures to turn negative for the first time ever last month.
“At first blush, this looks like a fairly decent report for the bulls,” Investing.com analyst Barani Krishnan said. “But the market has probably gotten so far ahead of itself this week that it’s trending deeper into the red after the data.”
Gasoline inventories unexpectedly fell by 3.2 million barrels, versus forecasts for a rise of about 43,000 barrels. Distillate stockpiles soared by 9.5 million barrels, compared with expectations for a build of about 2.9 million barrels.
“On the bullish side, we have an unexpected 3.2-million-barrel drop in gasoline that nicely follows through with the previous week’s 3.7-million drop,” Krishnan said. “You also have a Cushing build that’s slightly higher than the 1.8 million level cited by Genscape, instead of the scarier 2.8 million reported by API. This certainly takes some pressure off Cushing builds that had averaged 5 million barrels in four previous weeks.”
“On the bearish end, of course, distillates came in more than treble to expectations,” he added. “And if you add the 1.7 million barrels that went into SPR storage last week, that will give you a net crude build of 6.3 million barrels.”
“Also, refinery runs are finally above the 70% to capacity rate. Though that's way below the 90% and above norm for this time of year, it's still helped take more crude off the market compared to the previous week.”
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