NEW YORK, Consumer demand is still not drawing inventories of petroleum products lower, sending crude oil prices sharply downward in early Wednesday trading.
Crude oil prices drifted modestly lower in Tuesday trading after the International Monetary Fund revised its global growth forecast lower in part because of lingering concerns about the British exit from the European Union. That uncertainty is expected to have an impact on demand sentiments as the country re-evaluates its international trade relationships.
Oil prices recovered from below $30 per barrel earlier this year in part because lower consumer fuel prices spurred demand for petroleum products. Later Wednesday, the U.S. Energy Information Administration releases data for last week on supply and demand. Data already published by the American Petroleum Institute show a trend in crude oil stockpile declines, but a rise in gasoline stocks.
Commentary sent by email from S&P Global Platts found gasoline stockpiles have been unable to shed barrels despite high consumer demand.
“The region’s surplus to the five-year average has averaged 18.6 percent over the last ten weeks,” the assessment read.
Crude oil prices lost ground in the hours before the EIA release. Brent crude oil was off 1.1 percent from the previous session to $46.14 per barrel. West Texas Intermediate, the U.S. benchmark, was down 1.6 percent to $43.90 per barrel.
Prices have been relatively steady since May as some level of balance between supply and demand returns. Last week, oilfield services company Baker Hughes reported exploration and production activity increased for the third straight week, suggesting confidence was returning to the energy sector.
Investors will get a better indication of the health of the recovery as earnings season gets underway. Upstream company Halliburton, one of the first companies to release earnings, insisted its strategy was working despite reporting a 15 percent decline in revenue in North America and a 1 percent decline in the Middle East.
Halliburton Chairman and CEO Dave Lesar said recovery in exploration and production for the second half of the year would be “modest.”