US crude oil inventory were lower than expected but did not see a big response in prices after the API weekly supply report showed a significant decline also. Traders had expected a dip as we move into summer drive season and the massive Alberta wildfire continues to hamper North American production.
The Alberta wildfires in Canada have affected US inventory levels of oil, since Canada is by far the largest exporter of oil to the US.1 million barrels of oil per day were sidelined due to the fires meaning US oil inventory has gone down 5.1 million barrels last week making it 60% above a prediction by S&P Global Platts. However, since Canada has given the go ahead for oil workers to return to work, the American oil inventory may begin to recover.
However, the main focus is now the June 2nd OPEC meeting in which the Organization of the Petroleum Exporting Countries will begin to come to the agreement it failed to come to at the April 2016 meeting. Iraq's OPEC governor, Falah Alamri, stated, "After two years, the market is starting to balance but it nearly destroyed many countries," the two years he mentioned was the failure to come to an agreement at a November 2014 meeting OPEC held to decrease oil output.
Since the failure to agree on a price freeze, many countries who largely depend on the petrodollar to sustain their economy have experienced increase deficits if not near collapse of their economies. Such as smaller oil producing nations.
Shell UK and Ireland has laid off 500 people and that number may increase to another 2,200 of their worldwide workforce. The projections for the price of oil do not look promising as Shell has now revealed a total of 12,500 of their workforce, including direct contractors have been let go. A major partnership formed between Shell and BG Group in February means another 475 upstream jobs in the UK and Ireland will also be moved on. SEB head commodities strategist Bjame Schieldrop commented in an interview, "we are definitely moving out of this surplus situation that we've been living in since mid-2014. There will still be some time, maybe six months of surplus, but then we're basically into rebalancing."