The price of crude oil fell following the release of an industry report which showed that the decrease in inventory in the United States was lower than had been anticipated. The report by the American Petroleum Institute revealed that the number of barrels by which supplies dropped last week was 840,000. This was in contrast to what analysts had earlier projected – a dip of about 1.4 million barrels.
The report by the American Petroleum Institute also showed that stockpiles of gasoline actually went up by about 1.37 million barrels.
“We are still in a very well-supplied crude market in the U.S. The gasoline build was a bit of a surprise but makes sense given that this is the time of year refinery runs increase,” Wellington, Florida-based Energy Analytics Group LLC director, Thomas Finlon, told Bloomberg by telephone.
Last week the prices of oil had gone past $53 a barrel following the push by some producers to extend the OPEC supply cut deal by the more than 6 months that had been settled on. On May 25, ministers from the Organization of Petroleum Exporting Countries will convene in Vienna, Austria to discuss the possibilities of prolonging the supply cuts.
On the NYME, the May delivery for West Texas Intermediate dropped by 24 cents to reach $52.41 per barrel. This was the lowest closing price since the 7th of April. The total volume of oil that was traded hovered around 14% under the 100-day moving average. After the American Petroleum Institute report was released, West Texas Intermediate edged downwards by 32 cents to reach $52.33 per barrel.
The June delivery for Brent, on the other hand, dropped by 0.8% or 47 cents to reach $54.89 per barrel. Brent’s June delivery closing price was at a premium of $2.04 compared to West Texas Intermediate. According to a report on monthly drilling productivity report by the Energy Information Administration, the output of crude from shale plays will increase to a level of 5.2 million barrels per day next month.
The fall in oil prices was, however, given some support by a report indicating that there was a decline in output in Saudi Arabia. This is part of the production cuts that the oil-producing kingdom had agreed to as a member of OPEC. The report showed that Saudi Arabia’s crude exports declined from 7.7 million barrels per day in January to 6.96 barrels per day in February.