WTI US Oil Prices Fall 2% Despite Lower EIA Inventory
Yesterday WTI crude Oil broke the $70 support zone and today the decline continued to $68 lows, despite a draw in EIA inventory.
Oil Prices Under Pressure Amid Economic and Geopolitical Developments
Oil prices continue to face downward pressure despite a reported draw in US crude inventories. A weaker global economy and geopolitical shifts are weighing on the market, limiting any bullish momentum. One key development is the anticipated resumption of crude exports from Iraqi Kurdistan, following an agreement with the federal oil ministry over the weekend. This move could ease supply constraints and put further pressure on prices. Additionally, ongoing efforts toward resolving the Russia-Ukraine conflict may lead to an increase in Russian oil exports, further contributing to price declines.
As a result, sellers remain in control of WTI crude, which has dropped more than $1.50 today. The next key support level to watch is $67 per barrel, where buyers may step in. However, the broader risk-off sentiment in financial markets, fueled by weak US consumer confidence data and uncertainty surrounding Trump’s proposed tax cuts, continues to weigh on oil prices.
EIA Inventory Draw Fails to Lift Prices
The latest EIA report showed a larger-than-expected crude inventory draw, which would typically support prices. However, this positive data was overshadowed by weak product demand, as gasoline and distillate stockpiles increased more than anticipated. Higher refinery runs were expected to capitalize on a more competitive diesel and fuel oil market, but the overall impact on crude prices has been minimal.
EIA Weekly Crude Oil Inventory Report:
- US crude oil inventories decreased by 2.332 million barrels, significantly missing expectations of a 2.605 million barrel increase.
- Previous week’s inventory saw a 4.633 million barrel build, making this week’s drawdown a notable shift.
Gasoline Stockpiles:
- Increased by 369K barrels, contrasting with the expected 849K barrel decline.
- Indicates weaker-than-expected demand or increased refining activity.
Distillate Inventories:
- Surged by 3.908 million barrels, well above the projected 1.488 million barrel decline.
- Suggests higher production levels or softer demand for heating fuels and diesel.
Comparison with Private API Data:
- Crude oil inventories (API report) showed a smaller draw of 640K barrels, differing from the EIA’s larger 2.332M barrel decrease.
- Gasoline inventories were up 537K barrels in the API report, aligning with the EIA’s 369K barrel build.
- Distillate stocks fell by 1.109M barrels in the API report, while the EIA recorded a 3.908M barrel increase, suggesting significant discrepancies.
The unexpected draw in crude inventories could provide temporary support for oil prices, reflecting stronger refining activity or increased exports. However, the rise in gasoline and distillate inventories raises concerns about demand weakness in refined products. The discrepancy between API and EIA data adds uncertainty, but overall, the mixed report may limit any significant bullish momentum for crude in the short term. Traders will likely watch demand trends and upcoming economic data for further direction.
US WTI Crude Oil Live Chart
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