Ejiofor Alike with agency reports
Crude oil price fell wednesday even as the data released by the United States Energy Information Administration (EIA) showed that the US crude oil stocks fell last week as refineries hiked output, while petrol stocks decreased and distillate inventories fell.
Before EIA released its data later in the day, crude oil price had fallen ahead of an anticipated rise in US crude inventory, which was expected to provide more evidence that demand may be slowing in spite of ongoing crude oil output cuts by the Organisation of Petroleum Exporting Countries (OPEC) and imminent US sanctions against Iran.
But EIA reported that US crude oil inventories fell by 1.4 million barrels in the week to May 11, compared with analystsâ€™ expectations for a decrease of 763,000 barrels.
Despite the drop in US crude oil inventories, the global benchmark Brent crude futures were down 65 cents at $77.78 per barrel, while US crude futures fell 32 cents to $70.99 a barrel, leaving the spread between the two just shy of a 2015 high of $7 a barrel.
Reuters reported that physical crude oil markets are sagging under the weight of unsold barrels of oil, while the 50-percent rise in the oil price in the last year is encouraging major companies such as ExxonMobil, Royal Dutch Shell, Chevron, BP and Total to increase output.
According to the report, spot crude oil cargo prices are at their steepest discounts to futures prices in years as sellers are struggling to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in west Texas and Canada.
With renewed US sanctions looming against Iran and oil demand strong, analysts said crude markets would likely remain tight for much of the year.
A State Department spokesman said wednesday that there was enough oil supply in the global market to make up for potential fuel disruptions from US oil producer ConocoPhillipsâ€™ legal actions against Venezuelan state oil company, PDVSA
â€œThe US Department of State remains in contact with our partners in the Caribbean to reduce the risk of supply disruptions,â€ Vincent Campos, spokesman for the Bureau of Energy Resources at the department, said.
â€œThere is sufficient oil supply in the global market that countries can access,â€ Campos added
The US company had stated that it was far from collecting the full value of a $2 billion arbitration award against PDVSA, after Conoco won court orders allowing it to begin seizing PDVSA assets.
In a related development, he International Energy Agency (IEA) wednesday warned that global demand is likely to moderate this year, as the price of crude oil nears $80 per barrel.
In its monthly report, the Paris-based IEA cut its forecast for global demand growth to 1.4 million barrels per day for 2018, from a previous estimate of 1.5 million bpd.