WTI Fades Despite Biggest Crude Draw Since 2019

Oil prices extended gains overnight after API reported a surprisingly large crude inventory draw (the biggest in 2020) and bounced back above $40 this morning after the vaccine headlines.

“The market’s main concern is demand and how Covid-19 affects it,” said Louise Dickson, an analyst at consultant Rystad Energy AS.

This follows Dr. Fauci's warning yesterday that the U.S. is “going in the wrong direction” in its effort to contain the outbreak; but for now, all eyes on whether the official inventory data confirms API's surprise.

API

  • Crude -8.156mm (-2.7mm exp)

  • Cushing +164k

  • Gasoline -2.459mm (-2.7mm exp)

  • Distillates +2.638 (+900k exp)

DOE

  • Crude -7.195mm (-2.7mm exp, BBG -500k exp) - biggest draw since Dec 2019

  • Cushing -263k - 8 week streak of draws

  • Gasoline +1.19mm (-2.7mm exp)

  • Distillates -593k (+900k exp)

After three straight weeks of builds, DOE confirmed API's report of the biggest crude draw since 2019...

Source: Bloomberg

After a rebound (from storm Cristobal's shut-ins) in the prior week, US crude production was flat week-over-week...

Source: Bloomberg

WTI was trading just below $40.00 ahead of the DOE print and after briefly popping, began to fade back to pre-API levels...

As the OPEC and its allies stick with efforts to balance the market, Bloomberg notes that analysts were casting doubt on the longer-term prospects for oil consumption. Citigroup said on Wednesday that demand growth for oil products will never return to pre-virus levels. Standard Chartered said that short-term oil demand risks are to the downside as the virus spreads across the southern U.S.