Oil Stabilizes on Small Crude Draw

Crude oil prices recovered lost territory today after the U.S. Energy Information Administration reported an inventory draw of 1.4 million barrels for the week to May 3.This compared with a build of 7.3 million barrels estimated for the previous week that pressured prices last week.On Tuesday, the American Petroleum Institute estimated crude oil inventories had added a modest half a million barrels in the week to May 3.The EIA, for its part, also reported small inventory builds in gasoline and middle distillate inventories for the period.

In gasoline, the authority estimated an inventory increase of 900,000 barrels for the week to May 3, with production averaging 9.5 million barrels daily.This compared with an inventory increase of a modest 300,000 barrels for the previous week, when production averaged 9.4 million barrels daily.In middle distillates, the EIA reported an inventory build of 600,000 barrels for the week to May 3, with average production at 4.8 million barrels daily.

This compared with a minor inventory draw of 700,000 barrels for the prior week, with production at the time averaging 4.5 million barrels daily.Oil prices meanwhile deflated further as traders brushed off Middle East war risk and the AP reported its inventory build estimate. The EIA’s latest Short-Term Energy Outlook also contributed to the bearishness.

In the report, the EIA revised its oil demand forecast for the year down, now expecting global demand to grow by 920,000 bpd this year to 102.84 million barrels daily. That’s down from a forecast for growth of 950,000 bpd in last month’s edition of the report.

In supply, the EIA upped its growth forecast to 920,000 bpd from 850,000 bpd. None of this seems likely to come from OPEC+ as the cartel prepares for its next meeting in June when most observers expect it would extend its voluntary production cuts, possibly until the end of the year.