Crude Oil Prices Bounce Back from Nine-Week Lows Following API Report

Oil Prices in Flux Amid Market Changes

The oil market experienced a dip today, continuing its rollercoaster-like behavior of the past few days. This came in the wake of a hotter than anticipated PPI print, pushing WTI (West Texas Intermediate) to nearly nine-week lows. Since April, crude oil prices have been on a downward trajectory, largely due to the reduction of geopolitical risk premiums associated with tensions in the Middle East. Other factors such as refinery run cuts and narrowing timespreads have signaled a slightly softer market. Despite these changes, prices remain high for the year due to OPEC and its allies' restrictions on flows.

OPEC+ Members Exceed Agreed Output Limit

A report released on Tuesday by OPEC revealed that members of OPEC+ who have committed to additional output cuts exceeded their agreed limit by 568,000 barrels per day last month. It is widely anticipated that the alliance will extend these curbs at a meeting scheduled for June 1.

API Reports Larger Than Expected Crude Draw

The API (American Petroleum Institute) reported a larger than expected crude draw, and stockpiles at the Cushing hub also saw a decrease. The report also showed a drop in gasoline stocks while distillates increased.

WTI Prices Rally Following API Data

Prior to the release of the API data, WTI was slightly above $78, close to a two-month low. However, the prices rallied in response to the data. As Saxo Bank noted, "The focus is turning to the US CPI release on Wednesday which will be a make-or-break release for the Fed and guide its next policy move."

What's Next for Oil Prices?

The fluctuations in oil prices and the larger than expected crude draw reported by API provide much food for thought. As the market continues to react to geopolitical tensions, refinery run cuts, and other factors, it will be interesting to see how these dynamics play out in the coming weeks and months. What do you think about this situation? Feel free to share this article with your friends and engage in the discussion. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.