Lagos — Oil prices were volatile, returning to near $62 a barrel after reaching as high as $64. Prices retreated after the latest EIA report showed a surprising 1.3 million barrel build in U.S. commercial crude oil inventories, contradicting expectations for a 1.85 million barrel draw. This rise follows a larger-than-expected 3.45 million barrel build last week and reinforces concerns about weak demand as the market heads into the summer trading season.
Gasoline inventories increased by 0.8 million barrels and distillate inventories by 0.6 million, increasing short-term price pressure. However, both remain below their five-year seasonal averages.
Crude oil imports rose to 6.1 million barrels per day, a weekly increase of 247,000 barrels. However, the four-week average is still 13.5% lower than the year-over-year average, highlighting the weakness of US import demand. This continued trend could pressure oil-exporting countries such as Mexico, Brazil, and Colombia, which are heavily dependent on US crude oil imports.
While economic signals may remain bearish, geopolitical developments pushed prices higher early today, as reports suggested Israel may be planning an attack on Iranian nuclear facilities. The possibility of retaliatory measures raised fears of a broader supply crisis in the Middle East and could help limit downward pressure on prices.
*Quasar Elizundia Analysis , Market Research Strategist – Pepperstone
