Oil Prices Unmoved After API Reports

The American Petroleum Institute (API) reported a crude oil increase of 736,000 barrels this week, whereas analysts projected a decrease of 1.2 million barrels.

In the week ending June 10, the Department of Energy released 7.7 million barrels from the Strategic Petroleum Reserves.

Crude stockpiles in the United States have fallen by 74 million barrels since the beginning of 2021 and around 16 million barrels since the beginning of 2020.

The API recorded a rise in crude oil stockpiles of 1.845 million barrels the week before after economists projected a drop of 1.8 million. On Tuesday, oil prices were especially turbulent, with OPEC stating that May production was lower than its quota in April. Typically, this would result in a significant price increase as the market considers the possibility that OPEC has run out of spare capacity. However, high inflation, a shortage of spare refining capacity, and China’s Covid struggle have kept the increases in check.

WTI Fluctuates

WTI was down 0.22 percent on the day at $120.70 a barrel at 2:20 p.m. ET; however, it recovered up over $0.60 per barrel for the week. Brent crude was trading at $122.30, up 0.01 percent daily and about $1.20 per barrel weekly. For the fourth week in a row, crude oil production in the United States remained flat at 11.9 million barrels per day for the week ending June 3—a 1.2 million barrels per day decline from pre-pandemic levels.

The API recorded a 2.159 million-barrel drop in gasoline inventories for the week ending June 10; compared to the prior week’s 1.821million-barrel gain.

This week, Cushing experienced a decline of 1.067 million barrels. According to EIA data, Cushing’s inventories fell to 23.441 million barrels in the previous week, as of June 03; it went down more than half from 59.2 million barrels at the start of 2021 and down from 37.3 million barrels at the end of 2021.

Oil Supply Fears Mount

After ten weeks of inventory decreases, the market is poised for additional tightening as national average gasoline prices hit $5 per US gallon for the first time in history.

With US gasoline demand growing to 9.2 million b/d, gasoline exports remain high at 1 million b/d as Mexico and other Latin American countries remain reliant on US supplies.

Because US refiners can no longer obtain Russian VGO because it is still banned, many are forced to pick between gasoline and diesel, implying that both segments cannot be supplied concurrently.

News of OPEC+ nations failing to meet their production objectives is not surprising; however, the potential of undersupply has had a tangible influence on this week’s oil market. COVID lockdowns continue to hurt Chinese demand; however, further supply disruption in Libya and OPEC adjusting its growth forecast downward have more than countered adverse sentiment. With multiple banks and rating agencies raising their crude price forecasts for 2022, the new ICE Brent price appears to be around $125 per barrel.

Russia Earned 93B Euros in Fuel Sales Since the Invasion

Because Russia invaded Ukraine, the United States and later the European Union have boycotted or banned most or all purchases of Russian oil until the end of 2022.

On March 8, the United States prohibited all Russian oil imports. A week later, Russia retaliated against the US economic offensive. Despite sanctions, trade wars, and actual war, Russia earned €93 billion (Euros) from its fossil fuels in the first three months of its Ukraine invasion.

According to their June 13 report, the major importers of Russian oil were China (€12.6 billion); Germany (€12.1 billion), Italy (€7.8 billion), the Netherlands (€7.8 billion); Turkey (€6.7 billion), Poland (€4.4 billion), France (€4.3 billion), and India (€3.4 billion).

Russia has reduced its fuel prices due to the sanctions; hence, India, France, China, the United Arab Emirates, and Saudi Arabia have allegedly increased their petroleum imports. India imported 18% of Russian crude oil sales. Despite the increase in imports, China remains Russia’s top importer of fossil fuels.

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