Oil Prices Hold Gains As Gasoline Stocks Hit 12 Year Lows, Cushing 'Tank Bottoms' Loom
Brent crude prices are rising back toward $100 per barrel this morning following the latest flare-up in fighting to threaten the U.S.-Iran ceasefire
Prices rose after the U.S. military said Iran fired missiles toward Kuwait and Bahrain, which failed to hit their targets.
The United States said it then struck an Iranian military ground control station on an island in the Strait of Hormuz.
API:
Crude: -6.8MM
Cushing: -279k
Gasoline: +3.5M
Distillate: -214k
DOE:
Crude: -7.97mm - biggest draw since Feb
Cushing: -583k
Gasoline: +3.36mm - biggest build since Jan
Distillate: +1.50mm
US crude stocks fell for the sixth straight week with Cushing inventories testing tank bottoms once again. The week saw an unexpected jump in product inventories with Gasoline's biggest build since January...
Source: Bloomberg
Today's rise in gasoline stocks lifts them off their lowest level for this time of year since 2014...
Source: Bloomberg
Cushing 'tank bottoms' are in sight once again...
Source: Bloomberg
The Strategic Petroleum Reserve saw another huge drawdown this week (down 58mm barrels since the start of the war)...
Source: Bloomberg
Rig counts are on the rise as US crude production drifts back towards record highs...
Source: Bloomberg
US crude and product exports jumped back towards record highs...
Source: Bloomberg
WTI was trading around $95 ahead of the official data...
Finally, economists at Macquarie wrote in a note this morning that crude oil’s muted reaction to the closure of Hormuz has mainly been a function of the oversupply seen before the war, .
The analysts suggested that “the market will be ok for another month or two, especially given commercial crude stocks have been cushioned by SPR/product draws."
However, if the Strait remains closed at the end of the northern summer (Labor Day is Sept. 7), physical availability will tighten materially.
“If the Strait reopens soon, we expect prices to fall sharply. However, with stocks drawing rapidly, if the Strait remains closed, at some point prices will need to move much higher.”
'Tank Bottoms' are in sight around the world.