WTI Fades From Cycle Highs After Disappointing Inventory Data

Oil prices are continuing their recent acceleration this morning, with WTI above $66.50, after the International Energy Agency said a record glut built up last year is gone. Last night’s surprise gasoline build from API did nothing to shake confidence in demand returning (crude stocks dropped as expected). It wasn’t all positive though as IEA cut its oil demand forecasts as COVID continues to crush India.

“The outlook for demand remains fragile,” Toril Bosoni, head of the IEA’s oil markets and industry division, said in a Bloomberg television interview.

But the agency is “expecting a very strong recovery in demand growth in the second half of the year.”

Bear in mind this week’s inventory data will not show the impact of the cyberattack on the pipeline.

API

• Crude -2.533mm (-2.1mm exp)

• Cushing -1.209mm

• Gasoline +5.64mm – biggest build since April 2020

• Distillates -872k

DOE

• Crude -426k (-2.1mm exp)

• Cushing -421k

• Gasoline +378k

• Distillates -1.734mm

Official EIA data is significantly different from API’s report with crude stocks only drawing down very modestly and gasoline inventories only building by a small amount…

Source: Bloomberg

Keep in mind all these changes happened before Colonial Pipeline went down. The picture is likely much altered right now, with East Coast stockpiles falling this week because of the pipeline hack. Some three-quarters of stations in a few cities are without gasoline today, according to Gas Buddy.

US crude production remains ‘disciplined’ despite soaring prices and rising rig counts…

Source: Bloomberg

Total US Crude Exports fell to their lowest since Sept 2018…

Source: Bloomberg

WTI hovered around $66.50 ahead of the print and faded on the weaker than expected data…

Traders are expecting “a gradual resolution to the Colonial Pipeline shutdown,” according to Louise Dickson, an analyst at consultant Rystad Energy. “The market is again looking to Asia, Covid-19 cases, and the next signals for oil demand outlook.”