Oil & Gas

Crude oil prices rebounded slightly following the Energy Information Administration's report of a 2.5 million barrel inventory decrease for the week ending May 10. This shift contrasts with a minor 1.4 million barrel draw the previous week and an unexpected 3.1 million barrel decrease reported by the American Petroleum Institute earlier.

Gasoline and middle distillate stocks also saw marginal declines ahead of the summer driving season. Gasoline inventories fell by 200,000 barrels in the second week of May, with daily production averaging 9.7 million barrels. This contrasts with a 900,000 barrel build the previous week, which had dampened oil prices due to perceived weak demand. Middle distillate inventories decreased as well, though the exact amount was unspecified, compared to a 600,000 barrel build in the previous week. Daily production of middle distillates remained steady at 4.8 million barrels.

Oil prices were further supported by wildfires in Alberta, potentially impacting oil sands production. However, this upward pressure was counteracted by U.S. economic data showing higher producer price inflation for April, reducing expectations of rate cuts. Despite this, Federal Reserve Chair Jerome Powell indicated that further rate hikes are not currently being considered. This ongoing inflation and rate hike uncertainty has tempered expectations of a near-term rate cut.

Additionally, the EIA forecasted that U.S. shale oil output would rise to 9.85 million barrels per day next month, a 17,000 barrel per day increase from this month and the highest rate in six months, with the Permian Basin contributing significantly to this rise.