Crude oil prices reversed their trajectory from earlier this week, trending lower today after the American Petroleum Institute reported an estimated inventory rise in both gasoline and middle distillates, and Saudi Arabia cut its oil prices for Asian buyers to an almost four-year low.
Brent crude was trading at $64.76 per barrel at the time of writing, with West Texas Intermediate at $62.59 per barrel, both down from Wednesday’s close, after Saudi Arabia lowered its oil prices for July for the second month in a row and the API reported a gasoline inventory build of 4.7 million barrels for the last week of May.
The API also reported an inventory decline in crude oil, at a sizable 4.2 million barrels, but traders chose to focus on the fuel inventories, which also featured a middle distillate build of a modest 760,000 barrels.
Saudi Arabia’s price cut, meanwhile, turned out to be lower than analysts expected, on the grounds that local oil consumption rises during the summer, as the fuel is used for power generation during peak cooling demand season.
“A smaller reduction was likely due to strong domestic crude burn in Saudi Arabia and refinery runs that could limit barrels available for export,” an Energy Aspects analyst told Reuters.
A contributing factor to the price slide was OPEC+’s decision to add another 411,000 barrels daily to its production in July, even though the market reaction was delayed by geopolitical worries after the latest escalation between Russia and Ukraine.
Since the start of the year, oil prices have shed some 12% on the persistent expectation of a supply surplus, Bloomberg noted in a report earlier today. Most forecasters keep predicting a glut that keeps failing to materialize but traders keep acting on the assumption that it will materialize at some point.
By Irina Slav for Oilprice.com
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