WTI Spikes Into Green After Across-The-Board Inventory Draws

WTI Spikes Into Green After Across-The-Board Inventory Draws

Oil prices are lower this morning after API reported a bigger than expected crude build (admittedly offset by considerable draws at Cushing and in products) and China reportedly readies itself to unleash measures aimed at stabilizing its power supplies for the winter.

“The heating season is approaching and the price is still showing a further irrational upward trend,” Reuters quoted the commission as saying.

A Chinese intervention to bring coal prices down could “reverse the fuel switch to oil,” analysts at Commerzbank told Reuters.

“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.”

But all algo eyes will be on crude stocks to see if the official data confirms the big build from API.

API

Crude +3.294mm (+2.25mm exp)

Cushing -2.5mm – biggest draw since Feb 2021

Gasoline -3.5mm (-2.2mm exp)

Distillates -3.0mm (-2.4mm exp)

DOE

Crude -431k (+2.25mm exp)

Cushing -2.32mm

Gasoline -5.368mm (-2.2mm exp)

Distillates -3.913mm (-2.4mm exp) – biggest draw since March 2021

Despite a notable build reported by API, official data confirms a modest crude draw of 431k barrels last week with major draws at Cushing and in gasoline and distillates…

Source: Bloomberg

US Distillates inventories are at their lowest since April 2020 and Gasoline stocks at their lowest since Nov 2019.

US Crude production dropped modestly last week and remains below pre-Ida levels…

While crude output remains below pre-Ida levels, drilling activity continues to surge amid rising oil and gas prices. U.S. drillers have deployed an additional 46 rigs over the past six weeks, bringing the Baker Hughes rig count to 543 for the week ended Oct. 15.

This should support production in the coming months.

WTI traded down to a $80 handle briefly this morning but rallied up near $82 ahead of the official inventory data and extended gains on the across the board inventory draws..

Bloomberg Intelligence Energy Analyst Fernando Valle warns that:

“Negotiations for an infrastructure bill may be a relevant catalyst for long-term support, and we believe that a protracted standoff could weigh on gasoline- and diesel-consumption expectations for 2022.”

Finally, we noted that Saudi Arabia said any extra oil from the OPEC+ cartel would do little to bring down surging natural-gas prices.

“We see our role as extremely limited,” Saudi Energy Minister Prince Abdulaziz bin Salman said during the CERAWeek India Energy Forum on Wednesday.

“The issue is not the availability of crude oil. Even if we made it available in tons and tons, who’s going to burn it? Who is in need of it? And are they in need of crude or in need, for example, of gas?”

“The frustration is that I feel oil is being taken for a ride when the real issues are not being attended to,” the prince said.

Tyler Durden
Wed, 10/20/2021 – 10:36

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