WTI Extends Gains After Sizable Crude Inventory Draw, Shrugs Off Unexpected Product Builds

Oil prices are holding gains, with WTI around $69, after last night's bigger than expected crude draw reported by API, helped by signs of demand rebounding in the US (PMI/ISM) offsetting China concerns.

Crude prices have extended gains this week on OPEC’s new outlook and because nuclear talks between Iran and world powers stalled.

“There will always be a good amount of supply to meet demand,” Saudi Energy Minister Prince Abdulaziz bin Salman said at a forum in St. Petersburg on Thursday.

“We’ll have to see demand” before producers increase supply, he said.

Additionally, Saudi Arabia increased oil prices for customers in its main market of Asia by more than expected after Brent crude surged above $70 a barrel and OPEC forecast that global demand would heavily outstrip supply over the rest of the year.

API

  • Crude -5.36mm (-3.3mm exp)
  • Cushing +741k
  • Gasoline +2.51mm (-1.1mm exp)
  • Distillates +1.585mm (-1.6mm exp)

DOE

  • Crude -5.079mm (-3.3mm exp)
  • Cushing +784k - biggest build since Feb
  • Gasoline +1.499mm (-1.1mm exp) - biggest build since April
  • Distillates +3.72mm (-1.6mm exp) - biggest build since March

Crude stocks fell notably last week but product inventories unexpectedly rose...

(Click on image to enlarge)

Source: Bloomberg

US Crude production continues to remain 'disciplined' (in fact, falling 200kb/d last week) despite the soaring prices and surging rig counts...

(Click on image to enlarge)

Source: Bloomberg

Oil is in “strong demand right now” amid the world’s “strong recovery,” Daniel Yergin, the oil historian, and vice-chairman at IHS Markit, said in a Bloomberg TV interview. U.S. oil production will start to go up “at a modest rate” in 2H, Yergin said. Shale producers are focused on returning capital to investors, and companies are “getting on board” about net-zero carbon by 2050. He sees oil prices this year in the $60-$75/bbl range, though it could touch $80.

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Bill Myers 1 week ago Member's comment

$FANG $XOP $USO OK so we had EXACTLY the right #'s IF you just add the higher gasoline build to ESTIMATES versus the HIGHER crude DRAW to estimates. Basically the ESTIMATES really got it EXACTLY RIGHT! Crude -5.36mm (-3.3mm exp) Cushing +741k Gasoline +2.51mm (-1.1mm exp) Distillates +1.585mm (-1.6mm exp)