Crude oil inventories decreased by 2.5 million barrels

Crude oil inventories decreased by 2.5 million barrels: Yesterday, Tuesday, May 11, 2021,
the American Petroleum Institute announced that crude oil inventories fell by 2.533 million barrels for the week ending May 7.

Analysts had expected a decline of 2.817 million barrels during the week.

In the previous week, the agency recorded a huge decline in inventories amounted to 7.688 million barrels,
after analysts had expected a decline of 2.346 million barrels.

The API reported an increase in gasoline inventories of 5.640 million barrels for the week ending May 7,
more than offsetting the previous week’s decline of 5.308 million barrels.

Analysts had expected a drop of 600,000 barrels this week.

Distillate inventories saw a drop in inventories this week,
amounting to 872,000 barrels, after last week’s drop by 3,453 barrels.

Cushing’s inventories decreased this week by 1.209 barrels.

Oil prices this week

Oil prices rose the day before the data was released as OPEC oil demand forecasts remained unchanged as the colonial pipeline cutoff caused Gulf Coast refineries to stop producing.

As of midday Tuesday, WTI was trading at $ 65.47, or 0.85% for the day,
and $ 0.20 a barrel lower than the same time last week.

The benchmark Brent crude oil price rose at $ 68.72 a barrel, or 0.59% for the day.

After the release of the data, WTI was trading at $ 65.41,
while the benchmark Brent crude oil was trading at $ 68.67 a barrel.

Weekly oil production rates

With crude oil inventories low this week, US oil production was unchanged at 10.9 million barrels per day on average for the week ending April 30, according to the latest data released by the Energy Information Administration.

European oil imports increased last month

European crude oil imports rose by about 1 million barrels per day in April, as Brent crude prices rose, according to Bloomberg reports.

The United States, Nigeria, and Brazil were among the exporting countries that benefited from the relative recovery in oil demand on the continent, resulting from maintenance in many of the large producing fields in the North Sea.

“The arbitrage to Europe has opened up, and that should encourage higher inflows particularly from the U.S.

According to Bloomberg

and perhaps also Nigeria whilst Indian demand remains in doubt,” said James Davis, director of short-term market research at FGE, according to Bloomberg.

“The increasing demand from Europe could be tied to anticipation of easing up on lockdowns in the months to come,” said Emmanuel Belostrino, an analyst at shipping-intelligence firm Kpler, according to Bloomberg. 

Oil prices

Oil prices recorded two consecutive weeks of gains despite the significant increase in the number of cases of Coronavirus in India, which is among the largest importers of oil in the world.

While cases in India rose by six numbers a day, Europe and the United States began reducing lockdowns thanks to the application of the vaccine, prompting optimism for increased demand.

“Optimism for the acceleration of the US economy and plans to reopen the summer throughout the European Union are still in the driving seat of the oil complex,” Vanda Insights said in a comment to the market on Friday.

The US Labor Department’s jobs report released on Friday, which revealed weaker employment activity than expected, could not adversely affect prices although it indicates that the employment return may take longer than expected.

Saudi Arabia reduces oil prices to India

State-owned refineries in India are requesting regular quantities of Saudi crude oil in June, Reuters reported, citing official sources, after the kingdom lowered prices for it as the third-largest importer in the world.

Saudi Arabia reduced its official selling price to Asian customers this month by between $ 0.10 and $ 0.30 in response to the high number of coronavirus infections in India, which had a negative impact on its oil demand.

Bloomberg

Bloomberg noted that this is the first drop in Saudi crude prices since December of last year, reflecting weak demand in major Asian markets.

The Kingdom of Saudi Arabia also announced a rise in oil prices for Asian buyers, days after OPEC agreed to start adding a barrel to its daily production, which reduced the production limit that made India object because it considered it an artificial way to keep oil prices high.

The following month, Asian refiners and traders were forced to pay $ 1.80 above the record average for Saudi crude shipments.

As a result, India ordered its state-owned refineries to reduce their demand for Saudi crude in May and to look for alternatives to reduce its heavy dependence on Middle Eastern oil.

Currently, Saudi Arabia has cut the rate to $ 1.70 above the record average.

Meanwhile, Riyadh raised the selling price to US buyers by $ 0.20 a barrel to reflect the US economic recovery,
which led to an increase in demand for crude oil.

“This time there is no direction from the ministry to cut imports in June and unlike last time they (Aramco) have reduced the prices as well,” said one of the Reuters sources to the news agency.

The Norwegian oil sector makes new wage deals

Norwegian oil companies and industrial trade unions struck a wage deal this week, to avoid another strike that could have cost many millions in lost oil revenues.

Reuters reported that it was agreed to increase wages by more than $ 2000 for this year.

Unusually, Norway regularly grabs headlines due to its wage negotiation procedures.

On more than one occasion, conflicts arose, ending in strikes that took a large portion of the country’s oil and gas production.

A few months ago, Norway could not avoid the oil workers’ strike due to disagreements over a new wage deal for overseas workers.

In early October, 8% of Norway’s oil and gas production, or 330,000 barrels of oil equivalent per day,
was reduced due to the strike.

The strike ended after ten days, affecting 25% of Norway’s oil and gas production.

Two years earlier

Two years earlier, another strike shut down an oil field operated by Shell,
cutting off 1% of Norway’s total oil and gas production.

While the strike did not affect production strongly,
there were concerns that it would lead to contract cancellations and have a wider impact on the industry.

Norway is the largest oil producer in Western Europe,
with an average daily production of about 4 million barrels.

Most of its production is gas, but oil production in the past year increased significantly (by 20%) despite the Coronavirus pandemic, with the increase in production in the New Johan Sverdrup field,
one of the recent discoveries made by Norway in recent years.

Crude oil inventories decreased