Oil prices fell on May 18 at 2.5% as traders are no longer worried about the supply. Brent Crude settled down $2.85 or 2.5% at $109.11 a barrel. WTI (West Texas Intermediate) crude plunged $2.81, or 2.5% to $109.59 a barrel. Both of them have given up early gains of $2 to $3 a barrel due to a shift in risk sentiment as equity markets fell.
Brent stayed at its unusual discount to WTI just a day after the settlement of the U.S. benchmark in May 2020. Meanwhile, traders and analysts demand strongly on the tightening of U.S. crude stockpiles. 3.4m barrels of U.S. crude inventories fell just last week, based on the government data. It was such an unexpected drawdown due to refiners ramping up output responding to the tight inventories.
Two days after reaching a record high, the U.S. petrol price plunged at 5%. The East and Gulf Coast use capacity was up to 95%. It could put those refineries close to the highest possible running rates. However, John Kilduff, Again Capital LLC partner, argued that the report was bullish. Refiners race to add more refined products on the market. Dollar and global stocks are concerned about the economy as well as the rising inflation.
According to some sentiments, the U.S. plans to ease sanctions against Venezuela. Plus, they allow Chevron Corp to negotiate oil licenses with the country producer, PDVSA. Dennis Kissler, a senior vice president at BOK Financial noted that more Venezuela supply coming along with the equity markets caused a more technical correction in the crude.
More pressure on oil prices also refers to the EU failure to persuade Hungary to lift its veto on Russian oil embargo, said Reuters. Although, some diplomats hope for agreement on the ban. Russian crude output in April plunged nearly 9% due to Western sanctions on Moscow exports.
