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Crude oil prices recovered somewhat after the Energy Information Administration reported an inventory decline of 2.5 million barrels for the week to May 10.
This inventory change compared with a modest draw of 1.4 million barrels for the previous week and an unexpected decline of 3.1 million barrels for the week to May 10, as estimated by the American Petroleum Institute on Tuesday.
Gasoline and middle distillate inventories moved slightly lower ahead of the start of summer driving season.
Gasoline stocks shed 200,000 barrels in the second week of May, with production averaging 9.7 million barrels daily.
This compared with an inventory build of 900,000 barrels for the previous week, which depressed oil prices as traders took it for a sign of lukewarm demand. Production during the previous week totaled 9.5 million barrels daily.
In middle distillates, the authority estimated an inventory decline whose size it did not specify for the week to May 10, which compared with a build of 600,000 barrels for the previous week.
Middle distillate production last week averaged 4.8 million barrels daily, which compared with 4.8 million barrels daily for the previous week.
Oil prices meanwhile received some fresh support from wildfires in Alberta, which may threaten oil sands production. However, the upward pressure is being countered by economic data out of the U.S. which showed higher producer price inflation for April than expected, diminishing hopes for rate cuts. On the flip side, Fed chair Jerome Powell has signaled further hikes are not on the table, Reuters reported earlier today.
"The lack of progress on bringing down inflation continues to lower expectations of a rate cut in the near term," ANZ Research said in a note.
Meanwhile, the EIA has predicted that shale oil output in the U.S. would reach 9.85 million barrels daily next month, expanding by 17,000 bpd from this month—the highest output rate for the past six months. Most of the increase would come from the Permian.
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By Irina Slav for Oilprice.com
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