WTI Extends Losses Below $70 After Unexpected Crude Inventory Build
Oil prices are down again this morning as demand anxiety grew amid ‘Delta’-variant outbreaks in key consumer China, which countered improved sentiment in other risk assets. Additionally, for the second week in a row, the recovery in global air traffic has taken a step back, somewhat confirming the anxiety. After API reported a smaller than expected draw overnght
“The risks to demand in China remain the number one topic. Some market observers are already reviewing their GDP forecasts for the third quarter. There is particular nervousness on the oil market because oil demand suffers considerably from mobility restrictions imposed in a bid to combat coronavirus.,” Commerzbank analyst Barbara Lambrecht said in a note.
On the ‘bullish’ side of oil, tensions continue to rise in the Middle East, supporting prices. Iran’s newly elected hardline president, Ebrahim Raisi, took power on Tuesday, while hijackers briefly took control of an asphalt tanker in the Persian Gulf.
Will the official data override algos’ worries?
Crude -879k (-3mm exp)
Crude +3.627mm (-3mm exp) – biggest build since March
Gasoline -5.291mm (-1.6mm exp)
Distillates +832k (-500k exp)
Analysts expected a 10th weekly draw in the last 11 last week (even after API’s much smaller than expected inventory drop), but they were wrong… very wrong. DOE reported a 3.627mm barrel build in crude stocks – the biggest since March. Distillates inventories also rose unexpectedly…
US crude production remains controlled for now, not soaring like prices have been…
WTI had rebounded from $68 handle lows intraday before the official EIA data, hovering around $69.00 ahead of the print.
“Crude oil continues to trade soft with the focus on the risk to demand from a fast-spreading outbreak of the delta coronavirus variant in key importer China,” said Ole Hansen, head of commodities research at Saxo Bank A/S.
Wed, 08/04/2021 – 10:34