WTI Extends Losses After Crude Build, Production Ramp

WTI Extends Losses After Crude Build, Production Ramp

Oil prices have plunged overnight after a bigger than expected crude build reported by API and further pressure from The White House on OPEC+ to start spewing more deadly, poisonous, existentially-threatening fossil fuels into the world to bring down gas prices for Americans.

Despite the pressure from the U.S. and other importers, the cartel is expected to stick to a plan to raise output by a modest 400,000 barrels a day at its meeting.

“OPEC+ staying the course is largely baked in, but the market will watch out for surprises,” said Vandana Hari, founder of energy consultancy Vanda Insights.

Oil is likely weaker today ahead of The Fed’s anticipated policy-tightening today.

“There’s unease before the FOMC as the taper and future rate hikes may hurt growth,” said Ole Hansen, head of commodities research at Saxo Bank A/S.

“Commodities like crude oil have been the go-to markets for investors seeking to hedge against inflation, and if central banks like the Fed turn hawkish, that appetite may fade somewhat.”

But for the next leg one way or the other, algos will be watching crude stocks very closely…

API

Crude +3.594mm (+2.25mm exp)

Cushing -882k

Gasoline -552k

Distillates +573k

DOE

Crude +3.29mm (+2.25mm exp)

Cushing -916k

Gasoline -1.49mm

Distillates +2.16mm

After a bigger than expected crude build reported by API (and a continued drawdown at Cushing), the official data confirmed a 5th weekly crude build in the last 6 weeks. Distillate stocks unexpectedly built too…

Source: Bloomberg

Oil stocks at Cushing fell further towards their lower limit this week…

Source: Bloomberg

US Crude production rose last week, finally erasing the effects of Hurricane Ida…

Source: Bloomberg

WTI hovered around $82.00 ahead of the official data and slipped lower on the print…

Finally, we note that oil markets remain backwardated, a bullish pattern marked by near-term contracts trading above those further out, and further European NatGas prices are on the move higher again (thanks to Russia not pumping for 4 days)

This potentially starts the ‘transition’ to oil trade premium once again

Tyler Durden
Wed, 11/03/2021 – 10:36

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