Powell’s comments drive price lower

Oil prices fell yesterday: ICE Brent for July delivery closed at $111.93/b, making a -2% loss, while NYMEX WTI first nearby prices settled at $112.40/b, down -1.6%. For the first time since May 2020, NYMEX WTI prices traded higher than ICE Brent prices.

The market moved down at the end of the session when Fed Chairman said that economic growth could be hit by his hawkish policy but he would continue to raise rates as it was effective to slow inflation. Reports that the US administration gave its green light to Chevron to negotiate with the Venezuelan government also fueled the bearish sentiment, as it could open the door to the lifting of sanctions and could add more barrels to global market.

The meeting between Europeans foreign ministers did not end on the adoption of the ban on import of Russian crude oil and products as Hungary continued to veto the deal. The next summit to reach the agreement will take place on May 30-31.

According to an internal OPEC report, in April OPEC+ output was 2.6 mb/d below target and Russian crude production fell by 9% from March to April at 9.16 mb/d (see chart). Western countries are boycotting Russian oil, while India’s imports climbed by 6% mom to 277kb/d.

Finally, API reported a decrease of US crude inventories by -2.4mb and gasoline inventories by -5.1mb.

This morning, oil benchmarks are trading higher, NYMEX WTI gains 1.0%.

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