Crude oil price fell further Wednesday after the Energy Information Administration (IEA) reported another build in inventories at 2.2 million barrels for the week to June 7.
The price dropped from $62.29 Tuesday to $61.13 per barrel. Precisely Brent crude, which is equivalent of Nigerian Bonny crude, was sold at $61.06.
The authority expects Brent crude to average $67 a barrel, down from $69 a barrel forecast in the May edition of the Short Term Energy Outlook (STEO).
According to OilPrice.com, this compares with a build of 6.8 million barrels a week earlier that combined with a 3.2-million-barrel build in gasoline inventories as well to push prices lower.
Last week, gasoline inventories added 800,000 barrels, according to the EIA, despite driving season presumably gathering pace. Gasoline production averaged 10.3 million barrels daily last week, compared with 10 million bpd a week earlier.
Distillate fuel production averaged 5.2 million bpd in the reporting period with inventories down by 1 million barrels. This compared with a sizeable build of 4.6 million barrels a week earlier.
The inventory report comes amid plunging oil prices as the market holds its breath for OPEC+’s decision on oil production cuts, namely, whether they will extend the cuts until the end of the year.
There is also persistent uncertainty about demand trends as the U.S.-Chinese trade war continues to escalate. The latest update here came from President Trump, who threatened tariffs on another US$300 billion worth of Chinese goods if China’s President Xi Jinping does not make an appearance at a scheduled bilateral meeting during the G20 summit later this month in China.
A day earlier, the EIA released its latest Short-Term Energy Outlook, in which it revised its average price projections in tune with the latest price developments. Now, the authority expects Brent crude to average $67 a barrel, down from $69 a barrel forecast in the May edition of the STEO.
The EIA also had more bearish news for oil prices: it said US oil production will rise by 1.4 million bpd this year, which although a 1-percent reduction from the May projection is still a sizeable rate of increase.
At the time of writing, Brent crude was trading at $61.06 a barrel, with West Texas Intermediate at $52.07 a barrel, both down by more than a percentage point from the opening of trade Wednesday.
