WTI Rebounds After Crude/Product Draws; Biden Admin Drains SPR for 14th Straight Week
Oil prices are down this morning after the ‘good news is bad news’ data from the US offsetts additional production-cut announcements this week from OPEC-plus members Saudi Arabia and Russia.
Crude remains about 10% lower this year, with China’s lackluster economic recovery and higher US and European interest rates weighing on the outlook for demand. The surge in borrowing costs is leading to lower global oil inventories, possibly setting prices up for spikes further down the line.
“The oil balance will likely tighten and so will financial conditions,” said Tamas Varga, an analyst at brokerage PVM.
“Persistent recession worries will probably encumber but not prevent oil from marching higher.”
After announcing earlier this week that it would extend voluntary output cuts, Saudi Arabia lifted its flagship Arab Light crude price to Asia on Thursday and also boosted prices for Europe.
Crude: -1.508mm (-2.7mm exp)
After last week’s huge draw, expectations were for a smaller draw (which API showed last night), but the actual crude draw was smaller – just 1.5mm barrels. Stocks at the Cushing hub fell 400k barrels and products also saw notable draws…
Despite reports from late last week that the Biden administration actually bought 3.2mm barrels oil to refill the SPR (Delivery of the oil is scheduled Sept. 1-30 to the Big Hill SPR storage site in Texas.), the overall level of the SPR saw a 1.4mm drain. That raised the total draw on US crude stockpiles to almost 3mm barrels…
US refinery utilization rates dropped for a fourth straight week to 91.1% of capacity, the lowest since May. On a seasonal basis, it’s the lowest level seen since the pandemic.
US crude production rose back to cycle highs at 12.4mm b/d despite after rig counts having tumbled to their lowest since April 2022…
Weekly gasoline implied demand jumped to 9.6 million barrels a day to the highest level since December 2021, taking the four-week average to 9.39 million barrels a day. That’s the highest since late 2021 as well, but still well below pre-pandemic levels for this time of year.
WTI was hovering around $70.50 ahead of the official print, and extended its bounce after the data…
Voluntary cuts to oil supply should be enough to balance the market, the United Arab Emirates’ energy minister said.
Current oil supply is sufficient to cover demand, which is set to run at a high pace of about 2% this year, Suhail Al Mazrouei told Bloomberg TV in an interview. He said there has been no request forthe UAE to undertake voluntary output cuts — such as have been carried out by the likes of Saudi Arabia.
“What has been done is adequate for the time being,” he said of the voluntary cuts. “There was no call for a collective effort.”
Thu, 07/06/2023 – 11:10
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