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Oil Under Pressure by Weekly Jump in US Crude Supplies

May 2, 2018 at 16:36 by Andrew Moran

Oil prices are mixed midweek after a new US government report found that domestic inventories climbed about three times higher than what the market had anticipated. Despite crude under pressure, oil futures are trying to rally on concerns that the US exiting the Iran nuclear deal.

June West Texas Intermediate (WTI) crude futures rose $0.11, or 0.16%, to $67.37 per barrel at 16:14 GMT on Wednesday on the New York Mercantile Exchange. Last month, US crude prices recorded a 5.6% gain and they have advanced nearly 13% year-to-date.

Brent, the international benchmark for oil prices, is shedding its value in the middle of the trading week. July Brent crude futures slipped $0.24, or 0.33%, to $72.90 a barrel on London’s ICE Futures exchange. Brent also rose 7.7% in April and is up about 11% year-to-date.

According to the US Energy Information Administration (EIA), domestic stockpiles surged 6.2 million barrels for the week ending April 27, while US output hit a new record of 10.62 million barrels per day (bpd). Gasoline stockpiles edged up 1.2 million barrels, while distillate inventories slumped 3.9 million barrels.

The latest US Hughes Baker oil rig count stands at 825, up from 820 the week prior.

Investors are now focusing on the US government potentially scrapping the Iran nuclear agreement that was signed by former President Barack Obama. As part of the deal, Tehran would curtail nuclear activities in exchange for the reduction of sanctions. President Donald Trump will give his final decision by May 12. Iran is one of the biggest oil producers in the Middle East and ranks fifth in the world.

The US dollar impacted oil as the greenback surged 0.22% to 92.66, turning positive for 2018. A strengthening buck is bad for oil because it is priced in dollars and becomes more expensive for foreign traders to purchase.

In other energy markets, June natural gas futures dipped $0.046, or 1.64%, to $2.757 per British thermal units (btu). June gasoline futures slid $0.0185, or 0.88%, to $2.069 per gallon. June heating oil futures were flat at $2.107 a gallon.

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