WTI Reverses OPEC+ Gains After Big Surprise Crude Build
Oil prices have roller-coastered higher and now lower this morning following OPEC+’s decision to hike output minimally, and also note they have limited capacity for further increases. WTI traded lower overnight after an unexpedctedldy large crude build was reported by API.
“The announced increase from OPEC+ equates to a nonevent,” said Stacey Morris, head of energy research at VettaFi. “The amount is so modest that it is a rounding error for global oil markets,” she added, noting that the market remains “hypersensitive” to supply and demand dynamics and that “volatility around headlines is not going away.”
The oil market has reversed those OPEC+ gains as investors once again focus on fears of a global economic slowdown as signaled by numerous PMI/ISM surveys in the last few days.
Crude +2.165mm (+467k exp)
Crude +4.47mm (+467k exp)
After an unexpectedly large crude draw the previous, analysts expected a modest build this week (and API signaled a much larger build). Stocks at Cushing also rose for the 5th straight week
There was a 4.7mm drain from Strategic Midterm Reserve brings total down to 470 million barrels, lowest since May 1985.
Gasoline demand fell by 7.61% in weekly comparison, nearly reversing all of the gains the previous week and causing the four-week rolling average to decline by 2.5%.
The drop suggests demand remains suppressed despite the sustained decline in pump prices.
US crude production was unchanged on the week…
Perhaps rather notably, refinery capacity sank to 91% last week…the lowest in 3 months.
WTI was hovering around $93.75 (200MA $94.76) ahead of the official data and extended losses on the big build…
Either way, its not good news for President Biden as crude and wholesale gasoline prices look set to drag retail pump prices higher once again in the not too distant future…
Which won’t be a good look after The White House takes its victory laps today.
Wed, 08/03/2022 – 10:36