Oil Prices Decline Despite Moderate Decrease in Crude Inventories
June 22, 2023: Oil prices remained steady today despite a moderate decrease in crude inventories. According to the U.S. Energy Information Administration (EIA), there was a 3.8 million barrel decline in inventories for the week ending June 16. The current inventory level stands at 463.3 million barrels, which aligns with the five-year average for this time. This inventory change follows a significant build of nearly 8 million barrels the previous week.
In terms of fuel stocks, the EIA reported modest increases. Gasoline stocks rose by 500,000 barrels for the week ending June 16, following a build of 2.1 million barrels the previous week. Gasoline production averaged 9.8 million barrels per day (bpd), down from 10.2 million bpd the previous week. Middle distillate stocks increased by 400,000 barrels, compared to a build of 2.1 million during the last week. Middle distillate production averaged 5.1 million bpd, slightly higher than the 5 million bpd in the previous week.
Despite these inventory changes, gasoline prices decline as the summer driving season kicks into high gear. The lower prices are expected to boost demand during this peak season. Factors such as China’s slower-than-expected recovery, Russia’s steady oil exports, and concerns about a global recession have all contributed to the downward pressure on pump prices, as the Wall Street Journal reported earlier this month.
Looking at crude oil prices, they edged up in the early hours of Wednesday, driven by expectations of a hawkish speech from Federal Reserve Chair Jerome Powell during his testimony to Congress. Analysts at ANZ anticipate Powell’s testimony to reflect the Federal Open Market Committee’s projection of higher interest rates in the coming months and resilient inflation in the near term.
Overall, the oil market remains influenced by various factors, including inventory levels, global economic conditions, and central bank policies. As the summer driving season progresses, the dynamics of supply and demand and geopolitical developments will continue to shape oil prices.
