WTI Tumbles Below $63 After Crude Draw Extends JCPOA Uncertainty Losses

WTI Tumbles Below $63 After Crude Draw Extends JCPOA Uncertainty Losses

Much like the rest of the world’s assets (except gold), oil prices are plunging this morning as broader markets tumbled on inflation concerns (and liquidity-based stress from crypto/tech carnage) and talks over the Iran nuclear deal add to concerns over increased supplies as traders eye the potential for a recovery in the nation’s exports. That comes as the OPEC+ alliance loosens output curbs, and after U.S. crude stockpiles expanded. The rout in stocks is adding to investor caution. Additionally, a Chinese tax on three oil-related items that begins next month could shift crude flows and reduce some product exports.

This week’s data will likely be exaggerated by the impacts of the Colonial Pipeline closure.

API

Crude +620k (+1.7mm exp)

Cushing -53k

Gasoline -2.837mm (-1.2mm exp)

Distillates -2.581mm (-300k exp)

DOE

Crude +1.32mm (+1.7mm exp)

Cushing -142k

Gasoline -1.963mm (-1.2mm exp)

Distillates -2.324 (-300k exp)

After the prior two weeks’ draws, analysts expected a modest crude build in the last week as Colonial shutdown issues ripple through the energy complex. API reported a small build, and the official DOE data showed a bigger build (as products drew down more than expected)

Source: Bloomberg

As expected, we saw a giant weekly build in Gulf Coast gasoline inventories with the Colonial Pipeline down.

Bloomberg Intelligence Senior Energy Analyst Vince Piazza noted that the cyberattack on the Colonial Pipeline likely only had a temporary effect on U.S oil inventories, as some refineries used floating storage and others cut activity to navigate the interruption until operations resumed on May 15.

US crude production remains ‘disciplined’ despite the recent surge in prices and rig counts now back at their highest since April 2020…

Source: Bloomberg

WTI traded around $63 ahead of the DOE print

Crude is pressured by “increased risk aversion in view of the weakness on the stock markets,” said Eugen Weinberg, head of commodities research at Commerzbank AG. Brent has also found “strong technical resistance” at $70 a barrel, he said.

Tyler Durden
Wed, 05/19/2021 – 10:35

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