Oil prices continued to plunge yesterday despite US crude stocks fell by 4.4 million barrels last week, as announced by the EIA.
WTI prices fell nearly 2% after rising to $46.67 due to temporary support from EIA data and closed at $45.06, the lowest level in 3 months. US gasoline inventories increased due to seasonal declining demand, while refinery capacity run to record highs.
Refining capacity increased by 1%, or 313,000 bpd, reaching 96.1%, the highest since 2005. Gasoline stockpiles increased by 811,000 barrels. Diesel and heating oil stock rose by 709 000 barrels.
According to the US Department of Energy, US crude production rose by 52,000 bpd to 9.5 mbpd last week, along with rising product inventories, demand for crude will soon retreat.
Manufacturing PMI Index of China fell 0.2 points to 50.0 points, the threshold between expansion and contraction. Raw materials inventories index fell 0.3 to 48.4 (narrowing), showing input demand for industrial production slowed. This will adversely affect oil prices.
Saudi Arabia officially rasied prices for oil for sold to Asia by $ 0.4, almost equal to Bloomberg’s forecast of $0.7. Asian crude demand has filtered signal degradation due to low profitability.
Saudi Arabia is a major factor causing excess fuel supply, pushing prices down, and eliminating refining profits. According to JODI, Saudi Arabian fuel exports in May rose to a record of 1.32 mbpd. Low demand for refineries in Asia and Europe may negatively impact oil demand and oil prices.
Today WTI is currently trading at $44.84 at 1:27 pm GMT+7, down 0.6% compared with the opening price ($45.12).
Temporary effects from EIA data or the dollar is deteriorating, the fundamentals of supply and demand do not support for oil prices. Tonight the US will announce the unemployment claims last week, bad news for the dollar is good news for oil, but there is little chance for a rebounce.
Forecast: WTI will heading to the lowest level of March at $44.00, with the highest of the day around $45.35. If $44.00 resistance level is broken, the oil price is likely to fall free to $43.00.