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WTI Extends Losses After Unexpected Crude Build, Gasoline Demand Slows

Tyler Durden's Photo
by Tyler Durden
Wednesday, Jun 15, 2022 - 02:37 PM

Oil pries are modestly lower this morning, extending on yesterday's losses as traders weigh the impact of Fed tightening and Biden's letter to 'Big Oil' against China's solid overnight data.

"It appears that market participants got cold feet ahead of today's Fed decision, as a stronger tightening of monetary policy could have negative effects on oil demand," Commerzbank analyst Carsten Fritsch said in a note.

For now, while markets are calmly sitting on their hands ahead of the major event risk today at 1400ET, all algo's eyes will be on the inventory/demand data.

API

  • Crude +763k (-1.2mm exp)

  • Cushing -1.067mm

  • Gasoline -2.159mm

  • Distillates +234k

DOE

  • Crude +1.96mm (-1.2mm exp)

  • Cushing -826k

  • Gasoline -710k  (+100k exp)

  • Distillates +725k (+800k exp)

US Crude stocks rose for the second straight week (a surprise vs expectations a draw) and distillates inventories also built again. Gasoline stocks fell very modestly...

Source: Bloomberg

US crude production rose last week to 12mm b/d for the first time since May 2020...

Source: Bloomberg

Gasoline demand’s weak showing dampens optimism around its growth trajectory that arose following last week’s report. The dip in the weekly product supplied figure stalls out the four-week moving average, dragging demand further behind the 2015-19 average. Current levels sit 515,000 barrel a day below the 2015-19 average, and that gap will grow further if demand remands stagnant.

With The White House's focus on 'Big Oil', we note that US refinery utlization dropped very modestly last week to 93.7%

Source: Bloomberg

WTI was hovering around $118 ahead of the official data and extended losses to yesterday's lows after...

Finally, we note that in its influential monthly Oil Market Report, the IEA said global oil inventories rose in April and May following two years of declines. However it noted much of the gains came on the release of strategic supplies from industrialized countries and its uncertain on the future course of inventories.

"After seven consecutive quarters of hefty inventory draws, slowing demand growth and a rise in world oil supply through the end of the year should help world oil markets rebalance. This situation might prove short-lived, however, as tougher sanctions on Russia come into full force, oil demand in China recovers from Covid-lockdowns, if sharper Libyan losses persist and the OPEC+ spare production capacity cushion erodes," the agency noted.

The IEA left its 2022 demand-rise forecast unchanged at 1.8-million barrels per day over 2021, and expects a rise of 2.2-million bpd in 2023.

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