Image Source: Unsplash

Oil prices plunged today, closing well below the pre-Israel levels and breaking below the 200DMA for the first time since July as war risk-premia evaporate and demand fears resurgent.

“While the death toll in Gaza from Israeli air strikes continues to rise to unimaginable levels, the prospect for the conflict spreading to the oil-rich part of the Middle East is increasingly being put at near-zero,” said Ole Hansen, head of commodity strategy at Saxo Bank.

China trade data showed imports disappointing. At 11.5 million barrels a day, imports were up slightly versus September but remained around 1 million barrels a day below levels seen in the summer, noted Carsten Fritsch, commodities analyst at Commerzbank, in a note.

"This is disappointing in view of the record-high processing. Crude oil imports in the first ten months were a good 14% up year-on-year. The increase appears bigger because of the low basis for comparison, however, as imports were dampened by the coronavirus restrictions last year," Fritsch said.

"It is no surprise therefore that the figures are lending no support to prices today."

Can the API data turn the trend?

API

• Crude +11.9mm (+200k exp) - biggest build since Feb 2023
• Cushing
• Gasoline -400k (-500k exp)
• Distillates (-2.0mm exp)

API reports that crude inventories soared by 11.9mm barrels last week, the biggest weekly build since Feb 2023.

Source: Bloomberg

WTI hovered around $77.50 ahead of the print and extended the day's losses after...

(Click on image to enlarge)

Finally, we note that the U.S. Department of Energy announced late Monday a "supplemental solicitation" for up to 3 million barrels of oil for delivery in January 2024 towards replenishment of the SPR. That's a "small volume as compared to what has been liquidated since January 2021," said StoneX's Kansas City energy team.

WTI hits the level at which @SecGranholm said she would refill the SPR. Surely she is doing just that.

— zerohedge (@zerohedge) November 7, 2023

Additionally, the EIA report - usually released tomorrow (Wednesday) at 1030ET - will be delayed until next week due to planned systems upgrades.

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