WTI Holds Losses Despite Another Crude Draw
said Stephen Brennock, analyst at PVM Oil Associates. Oil prices have been struggling to find direction and are now rangebound after taking all the news on the chin, according to Stephen Brennock, analyst at PVM Oil Associates.
WTI oil prices have dropped to the lower end of their range, WTI below $70. This is despite any 'war premiums' that may have been associated with Russia's coup and expectations for a more hawkish Fed following today's strong economic numbers.
The market has quickly discounted any significant supply risk associated with the brief uprising of Russian paramilitary force over the weekend. This is part of a larger trend where Russian crude exports have often exceeded expectations in the past year, as the country has found buying interest in China and other emerging markets to offset lost market share in the U.S.
After last week's surprise draw, all eyes are now on the crude oil stocks.
API
Crude -2.4mm (-1.47mm exp)
Cushing +1.45mm
Gasoline -2.85mm
Distillates +777k
The US commercial crude oil stockpiles have been reduced for the second consecutive week (by more than expected).
The Cushing hub saw its stocks rise for the ninth week in a row.
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Source: Bloomberg
WTI traded at $68 before the API print, which was the low end of recent range. It extended modest losses after the API data...
Oil is stuck in a range and taking the news with a grain of salt.
Ole Hansen is the head of commodity strategy at Saxo Bank.
Bloomberg reported that on Tuesday, key nearby spreads, which are used to gauge the strength of oil markets, moved deeper into a bearish contago structure.
Due to a pessimistic view on demand, and high interest rates, timespreads are likely to continue to be affected by headwinds.
Goldman analysts wrote to clients in a client note.