Expectations of OPEC+ Deal Support Prices Despite Substantial Inventory Build

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US crude oil stocks posted a large increase of 15.2 MMBbl. Gasoline and distillate inventories increased by 10.5 MMBbl and 0.5 MMBbl, respectively. Yesterday afternoon, API reported a large crude oil build of 11.94 MMBbl alongside a gasoline build of 9.5 MMBbl and a distillate draw of 0.18 MMBbl. Analysts were expecting a smaller crude oil build of 9.27 MMBbl. Total petroleum inventories posted a very large increase of 33 MMBbl.

US crude oil production decreased by 0.6 MMBbl/d, per EIA. Crude oil imports were down 173 MBbl/d last week, to an average of 5.9 MMBbl/d. Refinery inputs averaged 13.6 MMBbl/d (1.3 MMBbl/d less than last week’s average).

Expectations of OPEC+ Deal Support Prices Despite Substantial Inventory Build

May WTI was down $2.45/Bbl yesterday to settle at $23.63/Bbl on skepticism that tomorrow’s OPEC+ virtual meeting will yield production cuts large enough to balance the market. Meanwhile, inventories continue to build here in the United States and abroad. Even if an agreement on production were to be reached tomorrow, it is unlikely that production cuts would take effect fast enough to prevent shut-ins as refiners continue to cut crude runs over the coming weeks. If the dismal implied demand figures in the EIA’s Weekly Petroleum Status Report are any indication (e.g. US gasoline demand at a 29-year low), additional run cuts are just around the corner.

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