Oil Prices Slide As Eurozone Crisis Worsens, US Stockbuild Continues

Benchmark oil prices declined last week on concerns about the European economy and US data showing that crude inventories continue to increase. The Greek political and financial crisis deepened, reigniting pessimism about the Eurozone economic recovery and a potential weakening of oil demand. On 16 May the European Central Bank said it had stopped providing liquidity to some Greek banks. Meanwhile, bank customers in Greece were withdrawing euros in case Athens decided to exit the European currency. On 17 May Eurozone worries spread to Spanish banks after data confirmed the country had slid back into recession. Oil prices were also undermined by another weekly increase in US crude stocks. In the 16 May US EIA Oil Statistics Commentary , BNP Paribas analysts Harry Tchilinguirian and Gareth Lewis-Davies said that a 2.1mn barrels stockbuild brought the cumulative build in US inventories to 35.4mn barrels over the last nine weeks. “The latest data represents a continuation of a trend of crude builds and product stock draws,” they observed. “Crude stocks built in the US Gulf Coast and at Cushing and at both locations inventories remain above the top of the five-year range for this time of year. Gasoline and distillate stocks continued to fall and by more than expected, leaving stocks for each product below the five year average.”

In its Weekly Petroleum Status Report , released on 16 May, the US Energy Information Administration (EIA) said US commercial crude oil inventories increased by 2.1mn barrels during the week ending 11 May. At 381.6mn barrels, US crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.8mn barrels and are at the lower limit of the average range. Distillate fuel inventories decreased by 1.0mn barrels and are at the lower limit of the average range for this time of year. Total commercial petroleum inventories increased by 2.9mn barrels. US crude oil imports averaged nearly 8.9mn b/d during the week, down by 86,000 b/d from the previous week. Over the last four weeks, crude oil imports have averaged about 8.9mn b/d, 60,000 b/d below the same four-week period last year.  US  crude  oil  refinery inputs  averaged  15.0mn  b/d  during the week, 302,000 b/d above the previous week’s average. Total products supplied over the last four-week period have averaged 18.7mn b/d, up by 0.4% compared to the similar period last year.

Settlement Prices For Benchmark Crudes ($/B)

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