Crude oil prices experienced a decline today following the release of data by the Energy Information Administration (EIA) indicating an estimated inventory build of 5.8 million barrels for the week ending April 5.
The EIA’s report also highlighted increases in fuel inventories. This contrasts with the previous week’s build of 3.2 million barrels, which coincided with significant reductions in gasoline and middle distillate inventories.
A day prior to the EIA report, the American Petroleum Institute (API) projected a build of over 3 million barrels in crude oil stocks, coupled with a modest draw in gasoline and a slight increase in middle distillates.
Gasoline inventories rose by 700,000 barrels during the week ending April 5, with production averaging 9.4 million barrels per day (bpd). This compares with a draw of 4.3 million barrels in the preceding week, during which production averaged 10 million barrels per day.
Meanwhile, middle distillate stocks saw a rise of 1.7 million barrels during the reporting period, with production averaging 4.6 million bpd. This contrasts with an inventory draw of 1.3 million barrels in the previous week, when production averaged 4.6 million barrels per day.
Prior to the EIA report, oil prices had stabilized following two days of losses amid expectations of a ceasefire agreement between Hamas and Israel. The API’s inventory build estimate further contributed to downward pressure on prices.
However, optimism regarding a ceasefire in the Middle East is waning, raising concerns about supply security in the event of further escalation. The potential involvement of Iran, particularly following the Israeli strike on the Iranian consulate in Damascus last week, presents significant risks.
Analysts emphasize the continued high volatility of prices, with Tony Sycamore from IG noting to Reuters that a single piece of news could reignite the upward trend.
“Anything from a cooler-than-expected US CPI tonight to another Ukrainian drone attack on Russian oil infrastructure to a response from Iran after Israel killed two of its generals in Syria last week is more than capable of re-igniting the uptrend,” Sycamore remarked.