Oil Futures Near 3-Week Highs

The latest US Energy Information Administration storage report delivered on Wednesday showed that crude inventories declined by 1.753 million barrels for the week ended May 12^th compared to projections of a 2.360 million barrel decrease. Crude stocks have been falling after hitting a record high of 535.5 million during the last week of March. Total inventories now stand at 520.8 million barrels, 3.00% below those highs.

The EIA also reported a dip in gasoline stockpiles by 413,000 barrels, while distillate stocks fell 1.944 million barrels last week, adding to notion that the supply overhang is slowly fading. The big news was that after 14-straight weeks of production gains, daily output fell to 9.305 million barrels per day last week, contrasting sharply with the 17-weeks of gains in the rig count.  The benchmark Brent July futures are currently perched just above the strong support at $52.00 a barrel.

Headline inflation in the Eurozone rebounded to 1.90% in April from 1.50% in March, in-line with the European Central Bank’s target of close to, but below, 2.00% inflation. During the same period last year, the consumer price index stood at 0.20% according to data released by Eurostat.  The biggest drivers of the headline figure were gains in transportation fuel costs, holiday packages, and heating oil which increased by 11.20%, 9.80%, and 21.20% respectively.

Meanwhile, telecommunications and garments contributed negatively to the index. Apart from the headline figure, the core rate of inflation, which excludes volatile items like food and energy, was confirmed at 1.20%. Sentiment towards the Euro has improved markedly following the 0.50% quarterly GDP gain reported on Tuesday. After breaking above strong resistance at 1.1100 on Wednesday and hitting a new multi-month high overnight, EURUSD momentum is pulling back, with the pair trending near 1.1135.