By FXEmpire.com
Outlook and Recommendation –
Crude Oil tracked lower at the end of May, closing the month at 86.57
This week’s petroleum supply data from the U.S. Energy Information Administration, which include robust builds in gasoline and distillate inventories and a slight decrease in crude oil inventories, mark a subsequent break from ten consecutive weeks of crude builds and 15 weeks of gasoline draws. Barring any unforeseen disruption in crude and product markets, this trend reversal, if confirmed in the next few weeks, may signal the start of a long-expected rebuilding of U.S. product inventories, as well as continued downward pressure on retail product prices this summer.
Directionally, the U.S. product markets tend to follow a seasonal pattern. U.S. refiners typically plan most of their maintenance activities during the first and fourth quarters. In the first quarter, maintenance is usually heaviest in February and early March. Reduced refinery inputs during that time lead to rising crude stocks but dwindling product inventories through the first quarter and into the second quarter. Seasonal swings in demand compound the effect of those shifts in the production cycle. Distillate inventories usually hit their trough in mid-April, following the heating season, while those of gasoline usually bottom out in May as winter-grade inventories are shed in favor of lower-volatility summer grades. May also typically marks an inflection point when refinery production returns in earnest. May is also when gasoline crack spreads typically reach their annual peak.
This year’s trend in crude oil and product inventories had been broadly consistent with seasonal patterns, but both the crude build and product draws were steeper and more prolonged than could be fully attributed to planned maintenance: crude stocks posted builds of 22.3 million barrels (12.8 million barrels more than the five-year average) between early April and late May (Figure 1), even as gasoline stocks drew by 21.7 million barrels (10.3 million barrels more than the five-year average) and distillate stocks by 18.1 million barrels (18.1 million barrels more than the five-year average).
With a worldwide drop in demand and continued revisions of forecast of future needs and lower GDP the demand continues to fall while OPEC is producing more oil than ever. Geopolitical crisis have negated and the embargo moves ahead with no threats and no supply disruption. Oil is expected to continue to remain in the low to mid 80.00 range.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
Historical:
Highest: 114.81 on May 02, 2011
Average: 88.78 over this period
Lowest: 67.17 on May 25, 2010
April Major Economic Events
- This Week in Petroleum
Release Schedule: - Gasoline and Diesel Fuel Update
Release Schedule: - Weekly Petroleum Status Report
Release Schedule: - Heating Oil & Propane Update (-)
Heating Oil, Propane Residential and Wholesale Price Data
Release Schedule: - Weekly Coal Production
Release Schedule: - Weekly NYMEX Coal Futures
Release Schedule: - Coal News & Markets
Release Schedule: - Natural Gas Weekly Update
Release Schedule: - Weekly Natural Gas Storage Report
Release Schedule:
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Originally posted here