‘If OPEC doesn’t hold together on this, I think the market will start to test the low $40s again.’ – Rory Johnston, Scotiabank
US crude oil inventories dropped for the seventh consecutive time last week, official figures revealed on Wednesday. The Energy Information Administration reported that US crude stockpiles fell 4.4M barrels in the week ended May 19, following the preceding week’s decrease of 1.8M barrels and surpassing expectations for a 2.4M barrel decline. Thus, inventories hit 516.3M barrels, the lowest level since mid-February, suggesting that the OPEC production cut deal began working. The data came out a day before the OPEC meeting in Vienna, Austria. Analysts expect that OPEC and non-OPEC countries will likely extend the deal for six more months. Refinery production climbed 159K barrels per day to 17.281M bpd during the reported week, whereas the refinery utilisation rate advanced 0.1% to 93.5%. The four-week average of crude exports rose 30% to 4.7M bpd last week, compared to the same period a year ago. The EIA also reported that inventories at the Cushing, Oklahoma, dropped 741K barrels last week. Oil prices rose shortly after the releases, with WTI futures hitting $51.88 per barrel, the highest since April 19.
