Inventories Rise Again
The latest data from the Energy Information Administration this week revealed a further surplus in US crude inventories, which have now risen for 15 straight weeks.
The EIA reported that in the week ending May 1st, US crude stores rose by a further 4.6 million barrels. The increase was a little less than the 7.8 million barrel increase forecast, which reflects some bounce back in demand.
That said, US crude stores are now just shy of the 535 million barrel all-time highs at 532.2 million barrels.
Storage Concerns Growing
The US Gulf Coast refining and export hub has now seen its crude levels rising to fresh record highs of 282.7 million barrels on the back of this latest increase. At the Cushing delivery hub in Oklahoma, crude stocks rose by a further 2.1 million barrels to 65 million barrels, the highest level in three years.
Refinery crude runs were up again last week, rising by 215k barrels per day as refinery utilization rates increase by 0.9% back up to 70.5% of capacity.
Elsewhere, the report showed that US distillate stockpiles, including diesel and gasoline, were higher by 9.5 million barrels last week. This was over three times the 2.9 million barrel increase forecast.
This latest increase brings the total distillate inventories level to 151.5 million barrels.
Gasoline Demand Bouncing Back
The report was not totally bearish, however. Gasoline stocks bucked the trend again last week.
Gasoline inventories fell by 3.2 million barrels over the week, despite expectations for a 43k barrel increase.
This is the second consecutive week of declines in gasoline stocks, reflecting a pickup in demand as lock-down measures begin to ease in places and more people take to the roads.
US Crude Production Falls Again
There was further good news for crude bulls as US crude production fell by 200k barrels per day to 11.9 million.
This is the lowest level of production since July 2019 and marks an extension in the recent trend of declining production levels.
However, given the heavily subdued state of global demand, US crude production levels still have a long way to come off before they can fuel any meaningful upside.
Is Crude Due A Reversal Higher?
The rally in crude has seen price trading back up to just shy of testing the 28.94 level resistance before coming off a little. However, while price holds above the 19.76 level, focus will be on further upside.
A test of the 19.76 level could prove to be the right-hand shoulder of a large inverse head and shoulder pattern, suggesting higher prices in the medium term. The key topside level to break will be the 34.82 mark where we also have trend line resistance.