By Kim Khan
Investing.com - Stockpiles of U.S. crude dropped for the second straight week, the Energy Information Administration reported Wednesday
Oil prices remained higher following the report, with WTI futures climbing more than 3%.
Oil inventories fell by about 5 million barrels for the week ended May 15, the EIA said. That compared with expectations for a build of about 1.15 million barrels, according to forecasts compiled by Investing.com.
Cushing hub inventories fell another 5.8 million barrels, almost aligning with the decline in total inventories.
“I think we can take our eyes off Cushing as it’s no longer a hot button issue -- the tanks aren’t going to blow there anytime in the near future,” Investing.com analyst Barani Krishnan said.
Gasoline inventories gained unexpectedly by 2.8 million barrels, versus forecasts for a drop of about 2.1 million barrels. Distillate stockpiles rose by 3.8 million barrels, compared with expectations for a build of about 1.43 million barrels.
“The more forward-looking meaningful numbers are in products,” Krishnan said. “Gasoline shows that refiners continued to ramp up gasoline production last week in anticipation of some return at least in weekend road travel for the upcoming Memorial Day weekend.”
“The EIA may have a lower gasoline production number for last week but that belies the fact that refiners are still in a higher output mode versus the absolute decline in demand seen last week,” he added “The Memorial Day weekend will be the first real stress test of $30 WTI.”
“We’ve gone up more than 230% since April 28 low and something has to give at this point if commensurate demand doesn’t kick in.”