Double-Digit Increase in Oil Prices due to Slowdown in U.S. Crude Oil Inventories

On April 29, oil prices soared by more than 10%. The increase in crude oil inventories announced by the US last week was lower than expected, and gasoline inventories unexpectedly fell. With the blockade measures, fuel consumption will recover. Our company provides a pumping well sucker rod.

Earlier this month, crude oil prices plummeted, and due to efforts to slow the spread of the epidemic, global fuel demand fell by about 30%. To alleviate the growing supply glut, the major oil-producing countries agreed to cut daily output by nearly 10 million barrels in mid-April.

The settlement price of US crude oil futures was reported at US $ 15.06 per barrel, up to US $ 2.72, or 22%. Brent crude oil futures closed at the US $ 22.54 per barrel, up to US $ 2.08, or 10.2%.

The U.S. Energy Information Administration (EIA) said U.S. crude oil inventories increased by 9 million barrels last week to 528 million barrels, about 7 million barrels below the highest level in history. This increase was slightly lower than the 10.6 million barrels expected by analysts in the Reuters survey.

Bob Yawger, head of futures business at Mizuho Bank, said that crude oil inventory growth is a large number, but not as large as our past three weeks. The slowdown in the growth of US crude oil inventories pushed back the time when oil storage facilities were filled up, and urgent storage capacity may cause oil prices to fall to negative values again.

He said: "The time to fully enter crisis mode has been delayed a bit."

Data show that US gasoline inventories have dropped significantly from last week ’s record high by 3.7 million barrels, as a moderate rebound in fuel demand offset the impact of a rebound in refinery output.

Demand for gasoline in the past four weeks is still 44% lower than the same period last year, but the decline in inventories suggests that the downward trend in consumption may be flattening. Total fuel demand has fallen by 28% in the past four weeks.

Although the U.S. oil storage capacity is rapidly depleting, the reduction of crude oil production by US shale oil producers should slow the rate at which crude oil flows into inventories. Rystad Energy, well-known Norwegian energy research and business intelligence company, said it estimates that shale oil producers' daily output will decrease by 300,000 barrels in May and June.

With European countries such as France and Spain and several US states planning to lift part of the blockade soon, the market's hope for demand recovery has also boosted oil prices.

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