EIA Crude Inventory Increases, Oil Prices Stabilize Above $73

Oil prices reversed by the middle of last week, but today the decline has stalled and the price is stabilizing in a 1 cent range. WTI tumbled around $8 or 10% lower, heading for the $70 level again, with risk sentiment being negative in financial markets, which gave a bid to safe havens such as the CHF and JPY, while risk assets such as Oil turned bearish.

WTI crude oil prices declined to a four-month low yesterday, but the decline stalled and WTI has been trading in a 1 cent range between $73 and $74 per barrel, amid significant global oil market developments. This drop comes in the wake of OPEC+’s recent decision to increase oil production starting in October 2024, despite evidence of slowing demand growth.

OPEC+ plans to boost supply by 500k barrels per day later this year, marking a notable strategic shift, with Saudis showing flexibility, suggesting possible adjustments if the increased supply surpasses actual market demand. Contributing to the current market dynamics, the American Petroleum Institute (API) reported a substantial rise in U.S. crude inventories of around 4 million barrels in the last week of May, though this initially had little effect on oil prices, with WTI trading on a 1-cent range, which is getting smaller as MAs squeeze the price in between on the H1 chart.

Crude Oil Chart Daily – WTI Squeezed Between MAs

However, today’s report from the Energy Information Administration (EIA) also indicated an increase in inventories, albeit smaller than the API’s figures. In addition to supply considerations, Saudi Arabia’s plans to start selling shares of Saudi Aramco signal uncertain market prospects. Meanwhile, peace discussions involving Gaza have reduced the geopolitical risk premium that typically supports higher oil prices.

The Weekly Oil Inventory Data from the EIA

• Crude oil inventories saw a build of 1.233 million barrels, contrary to the expected drawdown of -2.311 million barrels.
• Gasoline inventories increased by 2.102 million barrels, slightly above the estimated build of 1.964 million barrels.
• Distillate inventories reported a significant build of 3.197 million barrels, higher than the anticipated 2.532 million barrels.
• Cushing, Oklahoma inventories showed a build of 0.854 million barrels, compared to the previous week’s drawdown of -1.766 million barrels.
• Crude oil production remained steady at 13.1 million barrels per day, unchanged from the previous week.

WTI Live Chart