WTI Holds Stimulus-Hope Gains After Surprise Crude Draw

Oil prices rebounded overnight as stocks rallied on fiscal stimulus hope and the API-reported inventory data sank in.

“Traders see oil demand as fragile,” said Paola Rodriguez-Masiu, senior oil-market analyst at Rystad Energy. “We may see some production needing to be sent to inventories in 2020’s last quarter.”

API

  • Crude -831k (+1.9mm exp)

  • Cushing +1.61mm

  • Gasoline +1.623mm (-1.3mm exp)

  • Distillates -3.424mm (-1.7mm exp)

DOE

  • Crude -1.98mm (+1.9mm exp)

  • Cushing +1.785mm

  • Gasoline +683k (-1.3mm exp)

  • Distillates -3.184mm (-1.7mm exp)

A surprisingly large crude draw combined with a big distillates draw...

Source: Bloomberg

Most of the storm-impacted noise has now left the data.

Source: Bloomberg

WTI hovered around $39.50 ahead of the official data and maintained those levels immediately after...

Finally, we note that Bloomberg Intelligence Senior Energy analyst Vince Piazza warns that "daily U.S. crude output has crept close to 11 million barrels a day from the May low of 10 million, adding supply to a market whose downstream demand remains depressed by the effects of Covid-19. Well completions could drive production higher, and that would be compounded by any move of WTI into the high $40s. Coronavirus outbreaks in Europe and elsewhere add to the pressure on demand, and we believe adjusted storage remains high and limits long-term rally prospects."