Crude oil prices edged lower on Wednesday after data from Energy Information Administration (EIA) showed a much higher than expected increase in crude stockpiles in the U.S.
According to the weekly data from the Energy Information Administration, crude stockpiles in the U.S. rose by 5.48 million barrels in the week ended April 19, compared to forecasts for an increase of about 1.26 million barrels.
Gasoline inventories were down 2.13 million barrels in the week, more than twice the expected drop. Meanwhile, distillate stockpiles decreased by 660,000 barrels last week, much less than the expected drop.
According to the weekly report released by the American Petroleum Institute on Tuesday, U.S. crude oil inventories rose by 6.9 million barrels in the week to April 19 to 459.6 million.
West Texas Intermediate Crude oil futures for June ended down $0.41, or 0.6%, at $65.89 a barrel.
On Tuesday, crude oil futures for June ended up $0.75, or 1.1%, at $66.30 a barrel, a near six-month high.
The International Energy Agency (IEA) said in a statement on Tuesday that markets are “adequately supplied” and that “global spare production capacity remains at comfortable levels,” thanks to ample spare capacity from the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), Russian and also the United States.
Crude oil prices rallied to multi-month highs earlier this week after the U.S. government said that it would end all exemptions for sanctions against Iran and asked countries to stop importing oil from Iran or face punitive action.
Though United States said output from OPEC members and Saudi Arabia will help offset supply shortage that may arise out of the ban of Iranian oil, Saudi Arabia has reportedly said that it is unlikely to increase production anytime soon.
According to Reuters, Saudi Arabia’s Energy Minister Khalid al-Falih said today that since inventories were actually rising despite disruptions in Venezuela and tightening of sanctions on Iran, Saudi doesn’t see the need to do anything immediately.
Saudi Arabia intends to remain within its OPEC+ quota in May, the minister reportedly said, adding that “We think there will be an uptick in real demand but certainly we are not going to be pre-emptive and increase production.”
OPEC and its partners will likely have “some level of production management beyond June,” according to al-Falih, who reiterated that it was too early to predict details about targets and production.
The material has been provided by InstaForex Company – www.instaforex.com