Crude oil prices accelerated their fall today after the Energy Information Administration reported a rise in U.S. crude oil inventories of 5.7 million barrels for the week to June 5 and an increase in fuel inventories.
A day earlier, the American Petroleum Institute reported a crude oil inventory build of 8.42 million barrels, which caused prices to dive after several days of gains. Analysts had expected the EIA to report an inventory decline of 1.45 million barrels for last week. A week earlier, the EIA reported a decline in crude oil inventories, at 2.1 million barrels.
In gasoline, the authority reported an inventory increase of 900,000 barrels for the week to June 5, down from a build of 2.8 million barrels a week earlier. Gasoline production last week averaged 8.1 million bpd, compared with 7.8 million bpd a week earlier.
In distillate fuels, inventories went up by 1.6 million barrels last week, which compared with a hefty 9.9-million-barrel increase a week earlier. Distillate fuel production averaged 4.8 million barrels daily, compared with 4.7 million bpd a week earlier.
Refinery runs rose last week, to average 13.5 million bpd. This compared with 13.3 million bpd a week earlier. Capacity utilization averaged 73.1 percent, compared with 71.8 percent a week earlier.
Before the API shocked traders with its estimated inventory build, oil was trending higher on hopes the market would soon rebalance. However, there was downward pressure following news that U.S. producers were restarting production and worry that some Middle East producers, notably Iraq, will continue to produce more than their OPEC+ quota calls for.
At the time of writing, Brent crude was trading at $40.40 a barrel, with West Texas Intermediate at $38.10 a barrel, both down by about two percentage points from opening today.
Meanwhile, Norwegian consultancy Rystad Energy warned that deep production cuts could lead to a lasting deficit of oil, beginning as soon as this month. This could provide some upward pressure for prices especially if it is coupled with more positive news on the demand side.