Oil prices held on to gains today, amid equity market chaos, with WTI just losing $62 after hours.

“After a $2 rally yesterday,” it was hard to sustain further gains, said Peter McNally, global head for industrials, materials and energy at Third Bridge.

Still, “if the combination of seasonal demand, vaccine rollouts and ongoing supply constraints all conspire, it looks like inventories will continue to decline.”

We suspect tonight's data will be a mess given the impacts of the Texas storms on demand, refinery capacity, and production.

API

• Crude +1.026mm (-5.372mm exp)
• Cushing +2.738mm (-3.034mm exp)
• Gasoline +66k (-3.472mm exp)
• Distillates -4.489mm (-3.905mm exp)

Analysts' expectations were for a 5th weekly draw in a row (10th draw in last 11) but API reports a surprise crude build of just over 1mm barrels and a surprise build in gasoline stocks too...

(Click on image to enlarge)

Source: Bloomberg

The market is pricing in a strong short-term deficit, according to oil trader Vitol Group. But uncertainty remains over when demand will come back in force, and U.S. production is resuming in Texas after the cold snap.

WTI hovered just below $62 ahead of the API data and tumbled on the surprise crude, gasoline builds...

(Click on image to enlarge)

Meanwhile, Saudi Arabia and Russia will once again head into an OPEC+ meeting with differing opinions about adding more crude to the market, potentially pressuring the recent rally.

“It’s unmistakable that we’ll see some increase, but how much we get” is still uncertain, said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis.

“The Saudis like this price level a lot, because it’s high enough where they generate good levels of income but low enough to where they don’t anticipate a huge pickup in U.S. production.”

Riyadh is calling for caution while Moscow appears to favor a supply hike. The group will meet on March 4 to discuss whether to provide more crude to the market in April.