WTI Rebounds Back Above $70 After Big Surprise Crude Draw
Oil prices are lower overnight – extending the most recent declines – as Omicron-driven demand fears (last night’s ugly China data reinforcing that conviction) coincide with US shale and OPEC+ supply surplus anxiety. There appears to be a growing conviction that inventories are starting to rise and will accumulate more rapidly next year amid curbs on travel, a view adopted by the IEA on Tuesday.
Additionally, prompt prices for Brent crude briefly dipped to a discount known as contango that signals oversupply.
Gasoline stocks will be closely watched after the typical seasonal high demand pull for Thanksgiving didn’t really materialize as the Biden administration battled pricey gasoline at the pumps.
Crude -815k (-1.7mm exp)
Crude -4.584mm (-1.7mm exp) – biggest draw since Sept
Official data shows crude stocks dropping significantly last week – the biggest draw since September. Products also saw drawdowns as Cushing stocks rose for the 5th straight week…
Nationwide crude stocks are now sitting at the lowest since October. A lot of that draw came from huge drop in the Gulf Coast where exports jumped a whopping 61%.
Cushing stocks have rebounded after nearing operational risk lows…
US Crude production was flat last week at its highest since May 2020…
WTI traded back below $70 ahead of the official data and rallied back above it on the big crude draw…
Finally, a story that is not getting much play, yet is that China’s intensified regulatory scrutiny across a swathe of industries, from the tech sector to education firms, is also being applied to its army of independent oil refiners. Many of the so-called teapots are being investigated for not paying enough tax and those found guilty could see their crude import quotas cut, further crimping oil demand.
Wed, 12/15/2021 – 10:37