The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories decreased by 4.9 million barrels last week, maintaining a total U.S. commercial crude inventory of 529.9 million barrels. The commercial crude inventory stands at historically high levels for this time of year, according to the EIA.
However, aside from this bullish indicator others are not making the market bullish on oil. Gasoline stocks rose by 1.4 million barrels following six consecutive weeks of declines while inventories at the key crude delivery hub of Cushing, Oklahoma, rose 357,000 barrels last week, the EIA said. Despite the draw down on crude, total stocks of oil and all petroleum products grew again from already historic highs, up 1.1 million barrels to 1.357 billion barrels.
The fact is clear that the oil production and inventory are both coming down. And also the early of this week, Saudi’s speech on forcing Iran to join the freeze meeting 17th this month or it would not freeze the production definitely made the market highly doubts the outcome of the prospective agreement. Outlook for the meeting beats the actual decreasing inventory this week, longs are dismissing on Thursday with a week outlook and the Fed’s speech on Wednesday which posted the threats of a global economy growth again crashed the commodities.
Thursday’s decline also marks another pullback from the late-winter rally tied to hopes that major producers will agree to limit their output. Several key players, including Saudi Arabia and Russia, are expected to meet on April 17 in Doha, Qatar, to discuss a plan to alleviate the global oversupply and boost prices
However, earlier this week, oil prices fell after Saudi Arabia said the kingdom will freeze its oil production only if Iran agrees to curb its output. Tehran, however, has vowed to keep ramping up production until output rises to pre-sanction levels. There are also growing doubts about Libya’s attendance of the talks.
“Without the participation of the two countries with the most capacity headroom, a production ‘freeze’ is a misnomer at best,” said Michael Hsueh, analyst at Deutsche Bank. “Such an agreement would do little to change the supply outlook.”