Oil Prices Slide Over 2.5% Despite Major US Inventory Draws

Oil prices fell sharply on Tuesday, with West Texas Intermediate (WTI) crude dropping 2.79% to settle at $88.75 per barrel. Brent crude declined 2.42% to $91.97, according to live market data. The Bakken crude differential to WTI was $3.42 per barrel.

The sell-off occurred despite a much larger-than-expected drawdown in U.S. commercial crude inventories. The American Petroleum Institute (API) estimated a withdrawal of 9.119 million barrels for the week ending June 5, far exceeding analyst expectations of a 3.4 million-barrel draw, according to OilPrice.com. This continues a trend of significant draws, with crude stocks falling by an estimated 44 million barrels over the last eight weeks.

Other inventory data was mixed but largely supportive. Gasoline inventories fell by 1.191 million barrels, while distillate stocks rose by 1.3 million barrels. Stocks at the Cushing, Oklahoma, hub fell by 1.125 million barrels, OilPrice.com reported.

The price decline suggests traders are looking past the current tightness toward other macroeconomic or demand concerns. OilPrice.com noted that despite the recent draws, U.S. crude inventories are still up by almost 7 million barrels since the start of the year. The report also highlighted ongoing releases from the U.S. Strategic Petroleum Reserve (SPR), which fell by 7.9 million barrels last week to 349.2 million barrels—the lowest level since August 2023.

For Bakken operators, the price environment remains profitable but volatile. The local Bakken price, calculated by applying the differential to WTI, would be approximately $85.33 per barrel. The persistent inventory draws, particularly at Cushing, indicate healthy demand for midcontinent crude, which benefits Bakken barrels moving to that hub.

The broader market dynamic includes a pullback from recent highs, with WTI down roughly $4 per barrel from last Tuesday, as reported by OilPrice.com. U.S. oil production showed a slight weekly dip to 13.707 million barrels per day for the week ending May 29, though it remains nearly 300,000 bpd higher than a year ago.

Separate industry reports hint at operational pressures in other basins that could affect overall supply. Rigzone reported that "two extremes are currently playing out in the Permian Basin," with some gas-focused drillers shutting in wells, a situation that could have knock-on effects for associated oil production.