BLOG

WTI/RBOB extended yesterday's gains this morning, after bullish API data, and continued higher after DOE data confirmed the surprise crude build and decent sized product draws. Production rose to a new record high.

A “tidal wave” of bullish news - including falling oil stockpiles following winter and after seasonal refinery maintenance, possible U.S. sanctions on Iran and Venezuela, as well as sustained OPEC-led output curbs - is seen hitting the market in the not-so-distant future, Bloomberg reports that FGE said in a note.

Bloomberg Intelligence Energy Analyst Fernando Valle noted that domestic demand for refined petroleum products has been well above expectations for 2018, confounding fears of macroeconomic headwinds. Inventories should continue to decline, supporting higher crack spreads ahead of the peak summer season.

API

  • Crude -2.739mm (+3.25mm exp)

  • Cushing +1.644mm (-200k exp)

  • Gasoline -1.063mm

  • Distillates -1.926mm

DOE

  • Crude -2.62mm (+3.25mm exp)

  • Cushing +905k (-200k exp) - biggest build since Oct 2017

  • Gasoline -1.69mm (-2.5mm exp)

  • Distillates -2.02mm (-2.3mm exp)

Cushing stocks rose 905k barrels - the biggest weekly rise since Oct 17 but crude's surprise build (confirming API) and product draws were seen as bullish...

Cushing stockpiles are more than 46% below the average as crude extends a secular move to export facilities, but Cushing stocks are starting to find a bottom.

Of course, all eyes remain on production as US shale dominates Saudi hopes and prayers, and it rose once again to a new record high (up 26k b/d to 10.407mm b/d)

 

The specter of conflict involving giant producers is jolting prices, which have traded in a tight range since February, and last night's positive API data helped, and along with DOE's inventoiry draws sent prices higher once again...

“The possibility of new sanctions on Iran has been the main issue in recent days,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt told Bloomberg. “Oil sanctions against Iran would have a greater impact in an undersupplied market than in an oversupplied one.”