Diminishing Oil and Oil Refinery Products’ Inventories Point to Imminent Price Adjustment

Oil futures, dragged by a rising dollar and returning recession fears, extended a pullback that’s taken the U.S. benchmark back below the $80-a-barrel threshold, eliminating recent OPEC+ decision-backed gains when the cartel announced surprise production cuts earlier this month. In reality, worldwide crude deliveries becomes more and more deficient, so traders argue, that it won’t be a long time before the pricing oddness will self-resolve.

In the meantime though, WTI crude for May delivery (CL.1, -1.82% CLK23, -1.82%) fell $1.26, to $77.90 a barrel on the NYMEX, while June WTI (CL00, -1.83% CLM23, -the most actively traded contract, was also off $1.26, or 1.6%, at $77.98 a barrel. June Brent crude (BRN00, -1.78% BRNM23) declined $1.18, or 1.4%, to $81.94 a barrel on ICE Futures Europe.

In terms of the oil stats, The U.S. EIA estimated mixed inventory changes for the week ended April 14. Gasoline inventories rose by 1.3 million barrels for the week, with production averaging 9.5 million barrels per day, down from 300,000 barrels and an average of 9.8 million barrels per day in the previous week, according to the EIA.

In middle distillates, the EIA estimated that inventories fell by 400,000 barrels in the week ended April 14, compared with a draw of 600,000 barrels the previous week. Middle distillate production averaged 4.8 mbpd last week, compared with 4.6 mbpd the week before. A day before the release of the EIA's weekly report, API estimated that crude inventories fell by 2.67 million barrels.

Meanwhile, strong GDP growth and refining data from China tempered any significant damage from rate hike fears and paved a more solid roadmap for both Brent and WTI price recoveries towards $90’s levels.