WTI Bounces On Big Crude Draw, Gasoline Demand Pick-Up

WTI Bounces On Big Crude Draw, Gasoline Demand Pick-Up

Oil prices round-tripped overnight after a big crude draw (reported by API), along with fuel sales in India showing signs of recovery, sparked a push for $73 for WTI.

“Demand growth is outpacing supply and will continue to do so over the coming months,” said Stephen Brennock of oil broker PVM, adding that “ongoing efforts to revive the Iranian nuclear deal have so far failed to bear any fruits.”

Global oil demand will get back to pre-pandemic levels late next year, according to the International Energy Agency.

If DOE confirms API’s data, this will be the biggest crude draw since January….

API

Crude -8.537mm (-4.2mm exp)

Cushing -1.526mm

Gasoline +2.852mm (unch exp)

Distillates +1.956mm (+200k exp)

DOE

Crude -7.335mm (-4.2mm exp)

Cushing -2.15mm

Gasoline +1.954mm (unch exp)

Distillates -1.023mm (+200k exp)

US crude inventories fell for the 4th straight week – with the biggest draw since April.

Source: Bloomberg

US crude output rose notably last week (+200k b/d) as firms perhaps finally take advantage of rising prices and rig counts…

Source: Bloomberg

All eyes were on U.S gasoline demand today (as they have been since the start of spring and during the oil comeback from the pandemic) as the recent tumble is definitely not in keeping with the recovery narrative. The good news is… gasoline demand rebounded nicely…

Source: Bloomberg

WTI hovered around $72.25 (right where it was before API) ahead of the official data and rebounded as DOE confirmed a notable crude draw…

“The fact that oil prices are still showing few signs of slowing means there has to be some concern that if we go too much higher, we could start to see some early signs of demand destruction,” said Michael Hewson, chief market analyst at CMC Markets UK.

“For now, that doesn’t appear to be happening, but we’ve still made another 24-month high on Brent, pushing us closer to $75 a barrel and the highs from 2019,” he said in a market update.

“If we go much above $80 that picture could change quite quickly.”

Finally we note that brent crude prices have been tracking – almost perfectly – the optimistic rebound in global macro data…

And as OilPrice.com’s Tsvetana Paraskova notes, although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, some of the world’s largest commodity trading groups say.

There is a chance for $100 oil, Jeremy Weir, chief executive officer at commodity trader Trafigura, told the FT Commodities Global Summit on Tuesday.

“You need higher prices to incentivize… and also maybe to build on the cost of carbon in the future as well. You also need to attract capital in the business,” Weir told the online debate.

The largest commodity traders are bullish on oil in the near term, too.

Brent Crude traded at over $73.50 a barrel early on Tuesday, but the top executives of the trading houses see further upsides.

“Higher from here” for the next six months, Glencore’s Head of Oil Marketing, Alex Sanna, told the same event today. According to Sanna, better news about vaccination programs, inflation bringing in investor cash, and the demand recovery will all contribute to rising oil prices.

Tyler Durden
Wed, 06/16/2021 – 10:36

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