Crude Oil Prices Are Up For The 3rd Consecutive Day

by | May 25, 2023 | Oil Prices, American Petroleum Institute, Around the World, Crude, Europe, News

Crude oil prices rose for a third consecutive day, after gains on Monday and Tuesday, as the American Petroleum Institute (API) estimated late on Tuesday

Crude oil prices are up for the third day in a row!

Today during early morning trade in Europe, Brent Crude was up above $78 per barrel, at $78.06, rising by 1.63%. The U.S. benchmark, WTI Crude, had risen by more than 1.81% and traded at $74.23.

This means that crude oil prices rose for a third consecutive day, after gains on Monday and Tuesday, as the American Petroleum Institute (API) estimated late on Tuesday that crude oil inventories in the United States fell by 6.70 million barrels last week, compared with analyst expectations of a 525,000-barrel build.


What does this mean for you?

If the API data is confirmed by the U.S. Energy Information Administration (EIA) this would send U.S. gasoline inventories to the lowest level just before Memorial Day since 2014.

Gasoline stocks shed 2.1 million barrels, which compared with a draw of 1.4 million barrels for the previous week.

Gasoline production averaged 10.3 million barrels daily last week, which compared with 9.5 million barrels daily a week earlier.

Middle distillate inventories last week fell by 600,000 barrels. This compared with a modest inventory increase to the tune of 100,000 barrels for the previous week.

Middle distillate production averaged 4.9 million barrels daily last week, which compared with 4.9 million barrels daily the week before.

The API’s report of an inventory decline yesterday pushed prices higher, especially as it coincided with a statement by the Saudi energy minister that short sellers in the oil space should “watch out”.

Why is 2023 expected to see much higher oil prices?

According to Reuters:

“OPEC+ production cuts are expected to tighten the market, driving supply deficits in the second half of 2023, supporting higher oil prices,” analysts at U.S. financial services company Morningstar said in a note. OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said.

From the Oil Market Report, June 2023:

  • World oil demand will grow by 2.4 mb/d in 2023 to 102.3 mb/d, a new record.
  • China’s rebound continues unabated, with its oil demand reaching an all-time high of 16.3 mb/d in April.
  • An increasingly adverse macroeconomic climate will act as a headwind in 2024, and as the post-pandemic recovery will largely have run its course, oil demand growth is set to slow to 860 kb/d.
  • Non-OPEC+ leads world supply growth through next year, adding 1.9 mb/d in 2023 and 1.2 mb/d in 2024. As for OPEC+, total oil output in 2024 is set to decline by 200 kb/d as production curbs are carried through the year. Total oil supply is forecast to reach record high levels of 101.3 mb/d this year and 102.3 mb/d next year.
  • Russian oil exports dropped by 260 kb/d in May to 7.8 mb/d, largely unchanged from a year ago. Crude oil exports rose by 90 kb/d to 5.2 mb/d while product exports slumped by 350 kb/d to 2.6 mb/d. China and India accounted for at least 56% of total Russian exports, while shipments to Africa, the Middle East and Latin America made up another 12%. Estimated export revenues fell by $1.4 bn to $13.3 bn, down 36% on a year ago, with average crude prices easing from $60/bbl in April to $55/bbl in May.
  • Global observed oil inventories rose by 10 mb in April as a 15.9 mb decline in oil on water and a 1.1 mb drop in non-OECD stocks partly offset a 27 mb build in OECD stocks.
  • Attesting to oil’s bear market, the current ICE Brent future price of around $73/bbl is $50/bbl below summer 2022’s peak. Saudi Arabia’s announcement of deeper output cuts in early June was unable to stem the decline.
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