Oil prices managed gains today, rebounding off an ugly tumble back below $70 (WTI) around the US cash equity open, as supply constraints trumped any Evergrande or Delta related demand concerns.
The rise came as "the oil market will remain tight" for as long as demand concerns do not materialize, Carsten Fritsch, energy analyst at Commerzbank Research, said Tuesday in a note.
"U.S. oil production in the Gulf of Mexico is likely to remain hampered for considerably longer than previously anticipated," he said.
Algos' eyes wil be on API tonight and the official data tomorrow to see just how lasting the effects of Hurricane Ida will be.
Crude -6.108mm (-3.8mm exp)
Analysts expected crude stocks to drop for the 7th week in a row as the effects of Ida continue, and they were right as API reported a much bigger than expected 6.108mm barrel crude draw (and draws across products and at Cushing)...
WTI hovered around $70.60 ahead of the API print.
Some of the volatility in Tuesday’s trading session may have stemmed from traders adjusting positions ahead of the expiration of Nymex October crude futures.
“There are supply issues all around the market,” said John Kilduff, a partner at Again Capital LLC.
Notably, U.S. stockpiles of the so-called big 4 - crude oil, gasoline, distillate, and jet fuel - are combined, below 2018 levels now, according to data compiled by HFI Research.
Low stocks of crude and fuels are a key reason why gasoline prices are not falling after the busiest driving season ended.