The excitement brought by OPEC+’s agreement to extend the output cut deal for a month to July short-lived. Crude oil price only climbed modestly higher after the news. Gains were quickly evaporated. Concerning OPEC+, the market is mainly concerned about compliance by some participants. A survey by S&P estimated that OPEC’s 13 members lowered production to 24.3M bpd, for a compliance rate of 82% with their prescribed cuts. For non-OPEC participants, Russia and 9 other partners reduced output to a total of 13.9M bpd. The compliance level was 91%. The OPEC+ group’s collective compliance was 85%. While some producers cut output more than required, some were notorious for overproduction. For instance, OPEC members Iraq, Nigeria and Angola, and non-OPEC participant Kazakhstan, have been criticized for producing more than their allocated quota.

Meanwhile, inventory in the US has shown signs of rising again. The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks jumped +9.71 mmb to 1439.64 mmb in the week ended June 5. Crude oil inventory rose +5.72 mmb (consensus: -1.74 mmb) to 538.07 mmb. Stockpile fell in 3 out of 5 PADDs. PADD 3 (Gulf Coast) alone saw +6.87 rise in stockpile. Cushing stock dropped further, by -2.28 mmb, to 49.44 mmb. Utilization rate added +1.3 percentage points to 73.1% while crude production dipped -0.1M bpd to 11.1M bpd for the week. Crude oil imports slipped -0.69M bpd to 6.86M bpd in the week.

Concerning refined oil product inventories, gasoline inventory added +0.87 mmb to 258.66 mmb although demand gained +4.65% to 7.9M bpd. The market had anticipated a +0.07 mmb increase in stockpile. Production added +6.48% to 8.21M bpd while imports declined -19.57% to 0.63M bpd during the week. Distillate inventory gained +2.96 mmb to 175.83 mmb. The market had anticipated a +2.96 mmb increase. Demand pjumped -21.49% to 3.3 bpd. Production added +1.02% to 4.76 mmb while imports gained +8.59% to 0.18M bpd during the week.

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Released after market close on Wednesday, the industry-sponsored API estimated that crude oil inventory gained +8.42 mmb during the week. For refined oil products, gasoline stockpile dropped -2.91 mmb while distillate rose +4.27 mmb.

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