As a result of an unanticipated increase in U.S. crude stockpiles, crude oil prices fell by 1.16% Wednesday, closing at 6,492 INR. 1.825 million more barrels of crude oil were added to U.S. stocks last week, according to the Energy Information Administration (EIA), than the 2.55 million barrel drop that the market had anticipated.
Distillate inventories also increased, although petrol inventories decreased less than expected. There was also a 2.48 million barrel increase in crude inventories, according to the American Petroleum Institute (API). Because the disruption of oil supply has not occurred, the geopolitical risk premium resulting from tensions in the Middle East has decreased.
The OPEC+ meeting on June 1 is the current focus of market participants. It is anticipated that major oil producers will prolong their output cuts at this meeting to avert a worldwide glut and boost prices. The U.S. Energy Information Administration reported that weekly imports of crude oil from Mexico had dropped significantly to 184,000 barrels per day, the lowest level ever.
The backwardation of the falling premium of Brent’s first-month contract over the second is at its lowest level since January, indicating symptoms of weakness in the physical crude markets. This pattern seems to be alleviating worries about the limited prompt supply.
