Analysis by Dr. Nancy Yamaguchi
Oil prices declined significantly this week for the second week in a row. Many traders had hoped for a more dramatic outcome from the May 25 OPEC-non-OPEC meeting, and prices began to falter when the group stayed with the original idea of appending an extension to the existing production cut agreement. This week, the supply-demand fundamentals were weak, and prices dropped anew. West Texas Intermediate (WTI) is below the $46 per barrel (/b) level, but the $45/b price floor has been holding. This week appears to be the third week in a row that prices will end in the red.
Today’s prices have been fairly stable in the $45.25/b – $45.75/b range, and the $45/b floor has been holding. Thus far, it appears that most of the downward price movement occurred after Wednesday’s release of the weekly supply data from the Energy Information Administration (EIA). Although a weekly set of data does not determine a long-term trend, the data was bearish and the market responded.
The EIA reported a crude stock build of nearly 3.3 million barrels (MMbbls), a gasoline stock build of 3.324 MMbbls and a diesel stock build of 4.355 MMbbls. The EIA data also showed a huge drop in apparent demand, including a drop of 505 thousand barrels per day (kbpd) in gasoline demand and 520 kbpd in diesel demand.
WTI crude prices are down in the range of $45.40/b – $45.80/b this morning. WTI prices stagnated yesterday and closed at $45.64/b. WTI opened at $45.71/b today, a decline of 14 cents, or 0.31%, below yesterday’s opening price. Current prices are $45.70/b, up by 6 cents from yesterday’s closing price.
Diesel opened at $1.4225/gallon this morning. This was a decline of 0.43 cents (0.3%) below yesterday’s opening price. Current prices are $1.4251/gallon, up by 0.28 cents from yesterday’s closing price.
Gasoline opened at $1.4919/gallon today, a decline of 1.04 cents, or 0.69%, from yesterday’s opening. Prices are $1.4942/gallon currently, up by 0.23 cents from yesterday’s close.
