Oil prices are tumbling this morning, pressured by the broad weakness in stocks, a surprise build in crude stocks reported by API, and some positive headlines from Putin over the EU gas situation which may remove some upward pressure on oil prices from rotation.
Jeffrey Halley, analyst at brokerage OANDA, said both crude contracts looked overbought based on a widely followed technical indicator, the relative strength index.
"That may signal some daily pullbacks this week but does not change the underlying bullish case for oil," he said.
Some downward pressure came from the API's figures showing signs of slowing fuel demand and all eyes are on the official data to see if that is confirmed.
Crude +951k (-300k exp)
Crude +2.345mm (-300k exp)
Official DOE data showed a big crude build last week, confirming API's data, for the second straight week of rising inventories - not what the market expected from 'recovery'. Gasoline stocks also jumped higher...
Crude production is rebounding finally from Hurricane Ida's impact, though remains below pre-Ida levels...
After almost tagging $80 overnight, WTI was trading around $77.50 ahead of the official DOE data and held those losses after the crude/gasoline builds...
Bloomberg Intelligence Energy Analyst Fernando Valle lays out the environment: The energy crisis in Europe and China is sparking optimism across the oil and gas value chain. Crack spreads and oil prices are both up sharply, even after the increase in inventories for the period ended Sept. 24. Natural gas has seen the largest gains, which may help gas-to-diesel switching if there’s a cold winter in the Northern Hemisphere. Still, higher oil prices and ongoing issues in China may hurt consumption in coming months, especially if inflation of other commodities remains a drag on disposable income. Refinery utilization may not see another large boost as operators start maintenance season, delayed after Hurricane Ida. Shell’s Norco plant, which has been offline since the storm, is expected to restart by mid-October and reach capacity within a month.