WTI Slides After Big Surprise Crude Build
Oil prices extended yesterday's gains today, ending at their highest in a week, as colder weather forecasts in the US boosted prospects for energy demand, and a soft CPI print sent the dollar notably lower (and raised optimism among some that a soft landing was still possible).
Compounding bullish sentiment, China’s ambassador to the US said the country will continue relaxing its pandemic curbs and will welcome more international travelers soon, lifting demand prospects in the world’s top oil importer.
Additionally, OPEC urged “vigilance and caution” on its members as it reduced estimates for the amount of crude the group will need to pump in the coming months.
“As the year 2022 draws to a close, the recent global economic growth slowdown with all its far-reaching implications is becoming quite evident,” OPEC’s Vienna-based research department said in its monthly report.
“The year 2023 is expected to remain surrounded by many uncertainties, mandating vigilance and caution.”
The last few weeks have seen notably consistent product builds and crude draws and all eyes are on the API data tonight for signs of a product demand picking up.
Crude +7.819mm (-3.913mm exp) - biggest build since 10/7
After four weeks of sizable draws, the last week saw an unexpectedly large crude inventory build. Products also yet another weekly build...
As Bloomberg's Javier Blas reminds us, last week the SPR released 4.7 million barrels (~675,000 b/d). That's the largest weekly release since early October.
It puts the SPR at just 382.3 million barrels, the lowest since January 1984.
WTI was hovering around $75.40 ahead of the API print and slipped lower
Crude is still on track for its first back-to-back quarterly decline since mid-2019 on concerns about the global economic outlook, with thin liquidity in the oil market exacerbating price swings.