Oil prices fell yesterday due to a surge in gasoline inventories coupled with relatively insufficient demand, giving up part of the previous session's gains.
Brent crude oil futures remained steady at the end of the last session, closing at the 72.22 level after rising by 1.02% in the previous session. West Texas Intermediate Crude Oil futures dropped by 0.13%, closing the session at the 69.96 level after advancing by 1.18% in the previous session.
The Energy Information Administration recently reported that U.S. crude inventories went down by 5.2 million barrels in the week ending June 4. Crude stockpiles fell more than expected, as the surveyed analysts predicted a drop of 4.1 million barrels, while the American Petroleum Institute reported a fall of 2.1 million barrels. In contrast, gasoline stockpiles went up by 7 million barrels, significantly higher than expectations of 1 million barrels. In the same manner, distillate inventories increased by 4.4 million barrels, against expectations of 400,000 barrels.
Supply may increase in the future, now that Iran is considering hiking its oil output. However, it's still not clear whether it will be able to do so as it is still negotiating a nuclear deal with the United States. If successful, some economic sanctions could be lifted, which would allow Iranians to trade their oil.
However, US Secretary of State Antony Blinken warned that even if both the United States and Iran agree to revive the Joint Comprehensive Plan of Action, hundreds of sanctions would still remain in place until Iran's behavior changes.
Oil demand languished last year mainly due to the effects of the COVID-19 pandemic on the global economy. However, it has been getting stronger as of late, mainly due to the ongoing economic recovery.
Several countries are making efforts to contain the advance of the virus, which so far has infected 175,216,260 individuals and led to 3,778,311 deaths. Some governments are now invested in advancing their vaccination efforts, though in some countries the vaccination rates are slowing down, mainly because some people are resisting vaccination.
In line with the assessment of Goldman Sachs and the International Energy Agency, British Petroleum's CEO commented that he expects oil demand to continue recovering and to remain robust for some time.
“There is a lot of evidence that suggests that demand will be strong, and the shale seems to be remaining disciplined,” he told a news outlet. “I think that the situation we’re in at the moment could last like this for a while.”