US oil inventories increased less than expected

US oil inventories increased less than expected: Yesterday, Tuesday, May 18, 2021, the American Petroleum Institute (API) announced an increase in US crude oil inventories of 620,000 barrels for the past week ending May 14th.

Analysts had expected an increase of 1.680 million barrels for this week.

The institute recorded a huge decline in oil inventories amounted to 2.533 million barrels in the previous week, after analysts had expected a decline of 2.817 million barrels.

Since the beginning of 2020, crude oil inventories have increased by more than 50 million barrels.

The API also announced a decline in gasoline inventories of 2.837 million barrels for the last week ending on May 14, offsetting an increase of 5.640 million barrels in the previous week.

Analysts had expected a decline of 886 thousand barrels this week.

Distillate inventories witnessed a decrease amounting to 2.581 million barrels during the week, after last week’s drop by 872 thousand barrels.

Cushing inventories rose this week by 53,000 barrels.

Oil prices for this week

The price of crude oil trading decreased the day before the data was published, due to market tension as a result of the news circulating related to the Iranian nuclear agreement, the solution of which may lead to an increase in the introduction of Iranian oil in the market.

Once this news circulated about the possibility of increasing Iranian oil production, it was enough to shatter oil prices.

At midday, WTI was trading at $ 65.18, down 1.64% on the day and the percentage hasn’t changed much since this time last week.

The benchmark Brent crude oil price was $ 68.41 a barrel, or 1.40%, for the day.

After the release of the data, WTI was trading at $ 65.43 while Brent crude was trading at $ 68.65 a barrel.

Weekly oil production rates

According to the latest data released by the Energy Information Administration (EIA), with crude oil inventories lower this week, US oil production rose by 100,000 barrels per day at 11 million barrels per day for the week ending May 7,

Iran negotiates to return of its oil exports

Government officials said through Bloomberg, that Iran is preparing to boost its production and exports of crude oil as negotiations on the nuclear deal with the United States continue to progress.

The report stated that Iran may return to its production level of 4 million barrels per day within three months at most.

It could also add to this number the millions of barrels of crude oil currently stored.

The National Iranian Oil Company

The National Iranian Oil Company is currently preparing the oil fields to increase production, although an agreement is not certain.

Even if this increase in Iranian oil production is agreed upon,
it will take some time to remove all obstacles that the previous US administration
put in place to bring Iranian oil to international markets.

Bloomberg

“Our return may be a gradual process rather than swift and sudden — it can’t happen overnight,” the former official in the National Oil Committee and the envoy of the Organization of Petroleum Exporting Countries (OPEC) Muhammad Ali Al-Khatibi said in an interview with Bloomberg.

That’s partly due to the coronavirus pandemic having “significantly hurt demand,” he said.

Al-Khatibi also said that even when sanctions are lifted, some buyers may still be reluctant to do business with Tehran.

Whatever the outcome of the negotiations, and regardless of what will happen to the Iranian oil industry after the conclusion of the talks, the current Iranian oil minister has said that he will retire when President Hassan Rouhani’s term ends this year, and he does not intend to assume any other political positions.

Oil markets recover as flights start to return

The number of global commercial flights has more than doubled since this time last year,
and the number of US travelers has also increased six times since May 2020,
indicating that global demand for jet fuel is beginning to rise.

Analysts expect the recovery of global demand for jet fuel to be the slowest among all fuels,
and a return to pre-epidemic levels is not expected before at least 2023
when most long-haul flights will return.

The Energy Information Administration said earlier this month that demand for jet fuel in the United States began to rise as domestic air travel increased.

Since long-haul flights consume more fuel than shorter flights,
the reopening of international travel and vacations without quarantines will be a major boost
to the demand for jet fuel.

And recently there have been signs of an opportunity to spend the summer vacations.

In Europe, there are proposals that the European Union should allow entry to anyone who received the last dose of the vaccine approved by the European Union, at least two weeks before his arrival.

The impact of the spread of the virus on Indian oil

The worrying situation began with the spread of the Coronavirus in India,
affecting operations in some Indian ports, which could delay the unloading
of oil vessels and disrupt other commercial operations.

Karaikal port officials announced that its operations are “severely affected” by a complete curfew in Tamil Nadu. The disruption of port operations could affect oil and other trade if the situation continues.

Cargo movement at Visakhapatnam Port, one of India’s major marine terminals, is also partly affected after the local traders’ body announced force majeure in the port area until May 19, according to G.Veeramohan, president of the Vizagapatam Chamber of Commerce and Industry.

State-run refiner India’s Hindustan Petroleum Corp.,
which uses the Visakhapatnam port to import crude oil,
is unaffected as it uses an offshore mooring facility for unloading tankers,
Chairman Mukesh Kumar Surana said.

Coronavirus

India continues to fight the re-spread of the Coronavirus,
with the infection now spreading to rural areas.

The daily new cases are now less than the peak they reached last week, with more than 400,000 cases,
but the country recorded today, Friday, for the third day in a row, more than 4,000 deaths.

Due to the Covid-19 crisis, Indian demand for fuel decreased by 9.4% in April compared to March,
according to official data reported by the Press Trust of India on Wednesday.

The decline in oil demand amid domestic closures and curfews has been a source of concern for the market in recent weeks.

Gasoline and distillate prices

Gasoline and distillate prices in India hit record levels this week,
adding yet another worry over demand in the world’s third-largest oil importer.

OPEC

The Organization of Petroleum Exporting Countries (OPEC) said in its monthly report,
this week that the decline in oil demand in India is the main reason
for the decline in global demand expected earlier for this quarter.

However, the organization is optimistic that the acceleration of vaccination programs will raise the global demand for oil by more than 5 million barrels per day this year despite the current Corona crisis in India.

US oil inventories increased