WTI Holds Gains After 4th Straight Weekly Crude Build, Product Draws
Oil prices managed to hold on to gains today as supply concerns continued and falling temperatures in China revived concerns over whether the world’s biggest energy consumer can meet domestic heating needs (and Russia suggesting that it may not provide additional natural gas to European consumers amid an energy crunch in the region didn’t help the bear case across the energy complex). The global benchmark Brent closed above $85 a barrel for the first time since October 2018.
“Crude price volatility is here to stay as demand uncertainty remains elevated over the short-term,” said Ed Moya, senior market analyst at Oanda Corp.
“There is a lot of noise in all this morning’s headlines, but given the relentless winning streak, oil prices are ripe for significant rounds of profit-taking.”
U.S. crude stockpiles likely rose last week (for the 4th straight week), while distillate and gasoline stocks were expected to fall according to Reuters’ survey.
Crude +3.294mm (+2.25mm exp)
Gasoline -3.5mm (-2.2mm exp)
Distillates -3.0mm (-2.4mm exp)
Crude inventories rose for the 4th straight week (slightly more than expected)…
WTI traded up to just below $83 intraday but was hovering around $82.25 ahead of the print and inched higher despite the crude build as product draws dominated.
As National Post reports, with temperatures falling as the Northern Hemisphere winter approaches and heating demand increasing, prices of oil, coal and natural gas are likely to remain elevated, traders and analysts said.
“Supply-demand balances show that the market is experiencing a supply deficit, which is spurring deep inventory draws and driving prices upwards,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
“This market tightness is expected to extend into most of 2022, and crude oil demand will only catch up with crude supply by the fourth quarter of next year.”
Colder weather already has started to grip China, with close to freezing temperatures forecast for northern areas, according to AccuWeather.com.
Tue, 10/19/2021 – 17:15