Background on Key Figures and Organizations
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, play a crucial role in influencing global oil market trends. Austan Goolsbee, the President of the Federal Reserve Bank of Chicago, is a prominent figure in economic discussions and policy-making within the United States.
Oil Price Declines Amidst Increased US Crude Reserves
On this Wednesday, oil prices fell by more than 1% due to the possibility of an increase in US crude oil reserves. Simultaneously, OPEC revised downward its forecast for non-OPEC oil production growth.
- Brent crude futures: Decreased by 75 cents, approximately 1.1%, to $65.88 per barrel at 6:06 a.m. CDMX time.
- West Texas Intermediate (WTI): Dropped by 75 cents, or 1.2%, to $62.92 per barrel.
OPEC’s Adjusted Non-OPEC Production Growth Forecast
OPEC reduced its predictions for non-OPEC oil production growth this year. Originally, OPEC anticipated an increase of 900,000 barrels per day from non-OPEC+ producers for 2025. However, the revised forecast now projects an increase of 800,000 barrels per day.
“Definitely, the buildup in crude stocks as per the API figures wasn’t helpful. However, the API report also contained supportive elements, like significant drops in refined products,” said UBS analyst Giovanni Staunovo.
API Report and Its Impact on Oil Prices
According to market sources citing the American Petroleum Institute (API) data, crude stocks rose by 4.3 million barrels in the week ending May 9th. Meanwhile, gasoline inventories fell by 1.4 million barrels, and distillate stocks decreased by 3.7 million barrels.
The decline in gasoline inventories coincides with countries gearing up for the summer driving season in the Northern Hemisphere.
Roth Capital Markets analysts noted in a late Tuesday statement that the drop in refined products, as indicated by the API data, is positive for the long-term oil complex. It demonstrates that the oil market is under-supplied.
Upcoming EIA Inventory Data Release
The official weekly inventory data from the U.S. Energy Information Administration (EIA) will be published on Wednesday at 14:30 GMT.
According to a Reuters survey, crude and gasoline inventories likely fell last week, distillates probably increased, and gasoline potentially decreased.
Market Context and Oil Price Trends
Both oil benchmarks were trading near two-week highs reached in the previous session. However, price gains were limited due to ongoing concerns about demand.
Austan Goolsbee, the President of the Federal Reserve Bank of Chicago, commented on Wednesday that moderate consumer price inflation in April does not necessarily reflect the impact of increased tariffs on US imports. He emphasized that more data is needed to understand the direction of prices and the economy.
Key Questions and Answers
- What is OPEC? The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of 13 nations founded in 1960. It aims to coordinate and unify petroleum policies among its member countries to ensure oil supply stability and secure fair revenues for its members.
- Who is Austan Goolsbee? Austan Goolsbee is an American economist and professor at the University of Chicago Booth School of Business. He served as the Chief Economic Advisor to President Barack Obama from 2009 to 2010.
- What factors influence oil prices? Oil prices are affected by various factors, including geopolitical events, supply and demand dynamics, OPEC decisions, US crude reserves, and overall economic conditions.
