Crude oil prices fell by more than 1.5% at the end of trading today, Wednesday, May 10 (2023), after 3 sessions of gains, with the release of US inventories data.
As an unexpected rise in US oil inventories raised concerns about demand for crude, while investors evaluated US inflation data that showed a slowdown in the consumer price index during last April.
Crude oil prices today
At the end of the session, Brent crude futures contracts – for delivery in July 2023 – fell by 1.3%, to record $ 76.41 a barrel.
US West Texas Intermediate crude futures – for June 2023 delivery – also fell by 1.6%, to record $72.56 a barrel, according to data seen by the specialized energy platform.
And crude oil prices ended their dealings, yesterday, Tuesday, May 9, with an increase for the third consecutive session, with optimism about the demand for fuel during the summer.
demand for oil
US oil inventories rose by nearly 3 million barrels in the week ending May 5, in a possible sign of weaker demand.
While gasoline inventories decreased by 3.2 million barrels, distillate inventories fell by about 4.2 million barrels during the past week.
The data contradicted the expectations of 8 analysts, polled by Reuters, regarding a decline in crude stocks by 900 thousand barrels and a decrease of 1.2 million barrels in gasoline stocks.
“The sudden increase in US inventories, coupled with lower crude oil imports and weak export growth in China in April, exacerbated concerns about global oil demand,” said Priyanka Sachdeva, analyst at Philip Nova.
Data released today showed that the US consumer price index increased by 4.9% for the month of April, compared to 5% during the previous month.
New York Federal Reserve President John Williams said inflation remains very high and the central bank would raise interest rates again if necessary, though the Fed has dropped guidance on the need for future increases.
OPEC production
The market is also awaiting the monthly oil report from the Organization of the Petroleum Exporting Countries (OPEC), due out on Thursday, looking for clues as to whether the organization and its allies will need to cut production again to support crude oil prices.
And 9 countries from the OPEC + coalition announced, during the past month, an additional voluntary reduction in production by 1.6 million barrels per day from May until the end of the year, which raised the alliance’s cuts to 3.6 million barrels per day.
For its part, the Russian Energy Ministry said that the reduction in oil production in the country almost reached the target levels in April, according to Reuters.
Saudi Arabia, which has pledged to cut its production by 500,000 barrels per day starting in May, has told buyers in Asia that it will supply the full volumes of crude oil required for June.
Sources said that some Chinese refineries may have requested lower quantities of supplies, which would help the world’s largest oil exporter achieve its production cut target.
Canadian oil
In Alberta, Canada’s main oil-producing province, wildfires subsided on Tuesday thanks to cooler weather.
The wildfires forced oil and gas producers to stop producing at least 319,000 barrels of oil equivalent per day, or 3.7% of the country’s production.
Markets were also watching US President Joe Biden and senior Republican lawmakers about raising the US debt ceiling of $31.4 trillion, fearing an unprecedented default if Congress did not act within 3 weeks.
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