Crude Oil prices currently trading near $64.75, sharply lower from yesterday’s high of $67.01 per barrel on anticipation that US crude oil inventory has increased last week. The American Petroleum Institute reported late Tuesday that US crude supplies inched up by 620,000 barrels for the week ended May 14. API projection showed that gasoline stockpiles down by 2.8 million barrels, while distillate inventories fell 2.6 million barrels.
Crude oil prices to get fresh direction from US weekly inventory report, which is scheduled to release later today.
The market expects EIA to show crude inventories down by 2.9 million barrels. However, it is expected that gasoline inventories are likely to climb by 600,000 barrels but a drop of 200,000 barrel in distillates.
US crude oil inventories as of May 7 were -1.7% below the seasonal 5-year average, gasoline inventories were -0.9% below the 5-year average, and distillate inventories were -3.7% below the 5-year average.
US crude oil production in the week ended May 7 rose +0.9% w/w to 11.0 million BPD and was down by -2.1 million BPD from the Feb-2020 record-high of 13.1 million BPD. Baker Hughes suggests that active US oil rigs rose by +8 rigs in the week ended May 14 to a new 1-year high of 352 rigs. Rig count report is an early indication of US oil production levels.
BBC reported that "significant progress" has been made to broker an agreement between Iran and the US in nuclear talks. The US might be planning to lift sanctions to allow Iran to increase its crude exports. It is likely to keep oil prices under pressure.
Rising Covid-19 cases in Asia is hurting energy demand. The overall global Covid-19 caseload has topped 163.9 million, while the deaths have surged to more than 3.39 million, according to Johns Hopkins University. Fuel demand in India has plunged in recent months. India gasoline sales in April fell to 2.14 MMT, the lowest in 8 months. IEA cut its global 2021 crude demand forecast by -270,000 BPD to 96.4 million BPD, citing the recent surge of the pandemic in India.
According to the CFTC Commitments of Traders report for the week ended May 11, net long for crude oil futures dropped by 3,452 contracts to 4,96,561 for the week. The speculative long position fell by 8,559 contracts, while shorts were down by 5,107 contracts.
Crude prices are facing stiff resistance near $66.97 per barrel and $68.57 per barrel. It is likely to find immediate support near 20 days EMA at $64.22 and 50 days EMA at $62.41 per barrel.