Crude oil prices continued lower after the Energy Information Administration reported yet another weekly inventory draw on crude oil inventories.
The report came a day after the American Petroleum Institute estimated inventories had shrunk by almost 4 million barrels in the week to April 28.
The EIA estimated inventories had shed 1.3 million barrels in the period, which compares with a draw of 5.1 million barrels for the previous week.
Whatever the size of the draw, it was unlikely to move prices, however, as worry about the U.S. economy appears to currently be the dominant mood on the oil market and a build in gasoline stocks didn’t help.
The Fed is expected to announce another rate hike later today and Congress is locked in debt ceiling negotiations, neither of which is bullish for oil prices.
A decline in diesel demand is also not bullish, as it suggests a slowdown in U.S. economic growth. On the flip side, it has brought some relief to those worrying about a middle distillate shortage. Now, there are signs that gasoline demand may be on its way down, too, with driving season around the corner.
In the week to April 28, gasoline inventories rose by 1.7 million barrels, with production averaging 9.4 million barrels.
This compared with an inventory draw of 2.4 million barrels for the previous week and average daily production of 10 million barrels.
In middle distillates, the EIA said, inventories had shed 1.2 million barrels in the week to April 28, with production averaging 4.6 million barrels daily.
In the previous week, middle distillate inventories saw a modest draw of 600,000 barrels, with production averaging 4.7 million barrels daily.
Meanwhile, oil prices continued lower, with West Texas Intermediate dipping below $69 per barrel at the time of writing, and Brent crude a little over $72 per barrel.
While some argue that the next Fed rate hike has already been factored in oil prices—and it may well be—the recent collapse of First Republic Bank did nothing to change a pessimistic sentiment as fears were reignited of a knock-on effect across the banking industry. This is naturally weighing on crude oil prices, which means they may yet fall further despite OPEC+’s production control measures.