WTI Holds Big Losses After Surprise Crude Build
Crude prices crashed today, extending recent losses with WTI back below $58 at six-week lows amid dimming prospects of a steady recovery in demand from Europe to India.
“The weakness in crude prices isn’t likely to go away in the coming weeks, even as U.S. refinery utilization recovers to pre-storm levels,” said Fernando Valle, a Bloomberg Intelligence analyst.
“There is still the resurgence of Covid-19 in Europe and Asia, and refinery maintenance in China and these are likely to keep international demand weak for U.S. crude.”
Tonight’s API-reported inventory data will give us the next trend direction
Crude +2.927mm (-900k exp)
After four straight weeks of builds, analysts expected crude stocks to draw this week, but once again (if API is right) we saw a crude build. Gasoline stocks drew down once again.
WTI broke below a key technical level today and was hovering around $57.50 ahead of the API print and was unexcited by the data.
“The swing lower was triggered by the deteriorating near-term demand outlook in the face of still hampered refineries, surging interest and renewed European lockdowns,” Bart Melek, head of commodity strategy at TD Securities, said in a note.
“With prices breaking below the 50-day moving average during the session, technical traders may well take WTI lower still.”
Finally, we note that overseas buying isn’t expected to recover any time soon. China, the largest customer for U.S. oil, slowed its intake after purchasing heavily in recent months. Local producers are also competing with traders that have amassed large quantities in storage across the world and are looking to offload their supplies since it doesn’t pay now to store oil and sell in the future.
Tue, 03/23/2021 – 16:34