The price for a barrel of West Texas Intermediate (WTI) crude oil for July delivery tumbled more than 3.7% Wednesday morning to a low of $47.79, a four-week low. The U.S. Energy Information Administration (EIA) reports U.S. petroleum stockpiles Thursday morning, one day later than usual due to the Memorial Day holiday this week.

Analysts at S&P Global Platts expect U.S. crude oil inventories to have fallen by 3.2 million barrels in the week ended May 26. Gasoline stockpiles are expected to fall by 1 million barrels and distillate stocks look to slip by 300,000 barrels.

Normally a forecast for declines of this magnitude would put some air under crude prices. But this time is different. No, really.

At last week’s meeting of Organization of Petroleum Exporting Countries (OPEC), the cartel and its partners agreed to extend their production cuts of around 1.6 million barrels a day through the end of March 2018. Many analysts believe that absent a further cut to production, the extension of the current cuts won’t reduce global inventories sufficiently to return the supply-demand balance that OPEC members seek.

In fact, Saudi Arabia’s oil minister said that he sees global supply reaching the five-year average by the end of the year. According to Platts Oil Futures editor Geoffrey Craig, U.S. crude oil inventories have reduced the surplus to the five-year average by 17 million barrels since the beginning of the year. U.S. commercial crude oil inventories stood at 109 million barrels at the end of last week.

And where is that crude going when it leaves U.S. stockpiles? Mostly to U.S. refiners who were running at nearly 93% of full capacity last week, about three percentage points higher than at the same time last year. Last year, between Memorial Day and Labor Day, the peak U.S. driving season, inventories of reformulated gasoline fell not at all compared to the five-year average. At the end of last week, U.S. gasoline stocks were 8.95 million barrels above the five-year average.

WTI crude for July delivery traded down 2.4% at around $48.44 in the noon hour Wednesday. The contract’s 52-week range is $44.13 to $58.15.

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