Americas News
May Shaping Up Dismally For Crude As Oil Again Extends Losses
Official figures released Thursday by the Energy Information Administration settled earlier conflicting reports about U.S. stockpiles and deepened bearish sentiment by disclosing a surprise build in gasoline and distillate fuels.
As of 1550 GMT, Brent fell by $1.25 to $82.35 per barrel, and West Texas Intermediate dropped $1.15 to $78.08.
The EIA figures showed that while U.S. crude stocks declined by 4.16 million barrels in the week ended May 24, gasoline and distillate stockpiles together were about 4.57 million barrels higher; and while hopes had been high in many quarters for a robust Memorial Day start to the summer driving season in that country, the EIA's measure of gasoline demand declined about 2 percent from the prior week to 9.15 million barrels per day (bpd).
While this was enough for jittery traders to cause Thursday's crude price dip, it wasn't necessarily calamitous news for demand overall, according to John Kilduff, founding partner at Again Capital.
He said, "The gasoline demand is still a good number, even though I would have expected that to be up closer to 9.5 (million bpd) going into the last holiday weekend," and he added that "I was looking for a draw in gasoline, in particular, ahead of the holiday weekend but when refiners are cranking it out, that is too much to drain product inventories."
Given this, sentiment was reinforced that the June 2 online meeting of the Organization of the Petroleum Exporting Countries (OPEC) would result in the cartel maintaining its output cuts.
Brian Kessens, a managing director at Tortoise Capital Advisors, said of the stockpile numbers and the OPEC meeting, "The overall draw on the crude oil side is pretty healthy, it's a little bit bullish; though, the crude oil market is still waiting on the OPEC meeting this weekend….that will add some certainty to the market."
Will Sungchil Yun, a senior commodities analyst at SI Securities Corp, expressed a slightly different view: "A surprise from OPEC+ can't be completely ruled out and that could drive prices immediately higher."
It fell upon Spencer Kimball, energy analyst at CNBC, to summarize Thursday's crude trading, and from his vantage point the view wasn't good: "U.S. crude oil is down 4.8 percent in May, its worst performance since December," he stated. "Brent has lost 6.5 percent this month, putting the global benchmark on pace for its first negative month in five."
