Oil inventories fell by an average of 6.6 million barrels a day last month, according to S&P estimates, despite a drop in demand that fell sharply by five million barrels a day, the second-biggest drop on record. Oil demand fell faster only during the coronavirus pandemic, reports the British newspaper “Financial Times”, citing data from analysts at “S&P Global Energy” and “Goldman Sachs”.
Analysts at Goldman Sachs agree with this assessment, noting that global oil inventories are nearing their lowest level in eight years. In Northern Europe, aviation fuel stocks fell to a six-year low in April, according to Argus. Although the main impact has so far been felt mainly in Asian countries, gasoline stocks in the US could reach historic lows during the summer holiday season, according to the Financial Times.
Due to the war in the Middle East and the blockade of the Strait of Hormuz, the oil market is already short of a billion barrels of crude oil. Traders are warning that global inventories are approaching a tipping point, which could happen in as little as a few weeks. “It’s a huge scale, well beyond the normal range,” says Jim Burkhart, head of oil research at S&P Global Energy. According to him, the market has not yet reacted to the record decline in inventories, so “oil price increases are still ahead.”
The Financial Times estimates that total available global oil reserves are around four billion barrels.
