Production and stocks. According to the EIA’s weekly report, US crude stocks declined by 6,267 million barrels down to 391,3 million barrels during the week ended May 31st. Analysts had anticipated a 800K barrels decline.
Major market drivers.
Bearish factors.
The OPEC left its production quotas unchanged during the latest meeting on May 21st. It is currently estimated at 30 million barrels a day. Therefore, the supply is still excessive. The next meeting is to take place in December 2013.
The Fed may well curtail its bond purchases in summer-fall 2013.
According to the EIA’s May figures, US oil production in 2013 is expected to reach 7,42 million barrels a day, which is a 14% increase(y/y).
The global production of crude oil is currently outpacing the global consumption of oil, which is a bearish factor as well.
The USA is planning to make amendments to the existing legislation in order to liberalize the export of crude oil by 2015.
Seasonality indicates lower demand for oil in Q2.
Bullish factors
The seasonal demand for gasoline is expected to grow worldwide (in the USA in particular).
Geopolitical risks in the Middle East keep supporting oil prices. Russia ships anti-missile systems to Syria while Turkey is ridden with massive unrest and disorder caused by political confrontations.
Lower US oil stocks support oil prices as well.
Seasonality indicates flat markets in June.
The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of WTI oil:
