Crude oil prices fell on June 8 after the Energy Information Administration (EIA) declared a crude oil inventory build of 2 million barrels for the week to June 3.
This competed with a withdrawal of 1.5 million barrels for the week before, leaving inventories at 416.8 million barrels, which was some 15% under the five-year average for this time of the year. As a multiplying number of analysts review their oil price estimates upwards, the EIA also announced blended inventory data for fuels.
In gasoline, the EIA forecasted an inventory decrease of 800,000 million barrels for the week to June 3, which matched a draw of 700,000 barrels for the week earlier.
Gasoline production reached ten million bpd last week, which was a bit larger than the average for the week before. Goldman Sachs recently said both gasoline and crude oil prices would have to grow much further for the supply to weaken demand.
In middle distillates, the EIA announced an inventory build of 2.6 million barrels for the week to June 3. This competed with a draw of 500,000 barrels for the week earlier. Middle distillate production added up to five million barrels every day last week, which was another small output increase from the previous week.
Retail fuel prices in the United States have been breaking record after record recently caused by the combination of limited oil supply and reduced refining capacity than before the pandemic, while demand remains strong.
Buy Crypto NowThe situation may still be far from being resolved, however, with the upside potential in oil prices remaining large. The reason is that, according to some analysts, among them Goldman Sachs’ Damien Courvalin, the latest oil shortfall is a structural as opposed to a cyclical one.
This means that years of underinvestment and continuously growing demand have overturned the market into an undersupply that cannot be restored easily or quickly. According to Courvalin, although Saudi Arabia improves production significantly, it will not help beyond the immediate term.
