Crude Oil Prices Plummet Amid Inventory Concerns and OPEC Output Cut Review

Crude oil prices took a sharp dive on Tuesday, as traders grew concerned about rising inventory levels and potential changes to OPEC's March output cut agreement. The American Petroleum Institute (API) reported a buildup of 3.929 million barrels of crude oil stocks for the week ended May 14, exacerbating market worries. As a result, June light, sweet crude on the New York Mercantile Exchange (Nymex) traded below $17/bbl before settling at $17.11/bbl, down 83 cents.

Key Takeaways:

• Crude oil stocks increased by 3.929 million barrels, contrary to market expectations of a drawdown.
• Gasoline stocks fell by 4.282 million barrels, while distillate stocks rose by 2.095 million barrels.
• The refinery utilization rate was up 0.3 percentage point to 96.6% of capacity, a sign of increased refining activity.
• OPEC members suggested reviewing the March output cut agreement, sparking concerns about potential changes to production levels.
• Nymex products, such as June gasoline and heating oil, also took a hit, with prices falling below 50 cents per gallon for the first time since March 25.
• Natural gas spot prices remained flat in Louisiana and South Texas, while the June Nymex Henry Hub contract plummeted 8.1 cents to $2.262/MMBtu.

Statistics:

• Crude oil stocks increased by 3.929 million barrels for the week ended May 14.
• Gasoline stocks fell by 4.282 million barrels.
• Distillate stocks rose by 2.095 million barrels.
• Refinery utilization rate was up 0.3 percentage point to 96.6% of capacity.
• Nymex June gasoline fell by 2.02 cents to 49.04 cents per gallon.
• Natural gas spot prices remained flat in Louisiana and South Texas.
• June Nymex Henry Hub contract plummeted 8.1 cents to $2.262/MMBtu.

Sources:

• Alexander Brideau, Bloomberg, "Crude falls to lowest in four weeks as traders fret over OPEC and inventory reports."
• American Petroleum Institute (API), "Weekly Petroleum Status Report," week ending May 14.