WTI Holds Gains Despite Ida-Driven Surge In Gasoline Stocks
Oil rebounded further today with WTI back above $69 as a slow recovery in Gulf output sparked price upside (some 17.5 million barrels of oil have been lost to the market to date, with shutdowns expected to continue for weeks. Ida could reduce total U.S. production by as much as 30 million barrels this year, according to energy analysts.)
Most in the industry were expecting Gulf of Mexico production to return faster than refining, but now “it seems that it may be the other way around,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.
Traders, for now, appear to be shrugging off worries over demand in Asia (ignited by Saudi Arabia’s decision to cut the price for all crude grades sold to the continent by at least $1 a barrel). Additionally, disappointing U.S. jobs data on Friday also indicated the economic recovery may be stalling amid a resurgence in COVID-19 infections.
On a positive note, China’s crude oil imports rose 8% in August from a month earlier, and EIA’s modest cut to 2022 crude output forecast also helped at the margin.
This week’s inventory data is likely to start to show some impacts of Ida (pre-emptive draws ahead of the shut-ins)
Crude -2.882mm (-3.8mm exp)
Gasoline +6.414mm (-3.6mm exp)
Distillates -3.748mm (-3.0mm exp)
A smaller than expected crude draw and a big surprise gasoline build suggest the impact of Ida is already hitting inventories…
WTI was hovering around $69.40 ahead of the API print and shrugged off the nosiy data…
However, “given that OPEC+ is continuing its plan to raise production monthly, despite weak data from China and the U.S. raising slowdown fears and Saudi Arabia looking for market share in the region, oil is likely to remain under pressure,” said Jeffrey Halley, senior market analysts for Asia Pacific at brokerage firm OANDA.
Wed, 09/08/2021 – 16:35