WTI Extends Losses After Smaller Than Expected Crude Draw
Crude prices puked over 5% today as demand fears over Omicron (jet fuel demand) and European case count continued acceleration combined with Fed Chair Powell’s taper tantrum. While tighter monetary policy can be a sign of economic strength, it’s typically bearish for commodities. WTI briefly dropped below $65 a barrel for the first time since August during the session, while the global benchmark Brent also tumbled.
“That ties back to crude oil because if you start to pump the brakes on economic growth, you start to see impact on demand,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.
Oil traders are also tracking talks this week aimed at reviving Iran’s 2015 nuclear deal with world powers. Success at the negotiations in Vienna could lift sanctions on Iran’s economy, leading to a resumption in official oil flows. The exchanges began positively on Monday, according to a top European diplomat.
However, the next leg one way or the other will likely be decided by this week’s inventory data…
Crude -747k (-1.66mm exp)
Cushing (+1.00mm exp)
Crude stocks fell 747k barrels last week, less than expected…
After the biggest monthly drop since March 2020, WTI was hovering around $66.75 ahead of the API print and dipped after despite the small crude draw…
Are we about to see gas prices at the pump plunge?
As Bloomberg notes, the oil market is also continuing to weigh the impact of the omicron variant of the Covid-19 virus on demand and what OPEC+ may decide to do in response when the producer group meets later this week. New travel restrictions threaten the rebound in global crude consumption that has underpinned this year’s price rally.
Tue, 11/30/2021 – 16:37