WTI Dump'n'Pump After Across-The-Board Inventory Builds, 11th Weekly SPR Drain In A Row
Oil prices are modestly higher this morning ahead of The Fed's decision after the International Energy Agency said it expects record demand growth this year, while predicting the clean-energy transition will begin to cut demand growth through 2028.
"World oil demand will grow by 2.4 mb/d in 2023 to 102.3 mb/d, a new record. China's rebound continues unabated, with its oil demand reaching an all-time high of 16.3 mb/d in April. The non-OECD accounts for 90% of gains this year, as OECD demand remains lacklustre amid the current manufacturing slump," the agency said.
Additionally, China’s new crude import quotas helped cut recent pessimism over demand.
“I absolutely don’t buy into this argument that China’s not reopening,” Amrita Sen, chief oil analyst at Energy Aspects said in a Bloomberg TV interview.
“There’s a huge disconnect between the data that’s been coming in, and forecasts, versus prices.”
We also note this morning's earlier drop in crude seems linked to headlines on US-Iran discussions once again.
However, across the board builds reported by API may take some of the shine off the gains if confirmed by the official data.
API
Crude +1.024mm (-300k exp)
Cushing +1.502mm
Gasoline +2.075mm (+100k exp)
Distillates +1.394mm (+1.0mm exp)
DOE
Crude +7.92mm (-300k exp)
Cushing +1.55mm
Gasoline +2.11mm (+100k exp)
Distillates +2.12mm (+1.0mm exp)
The official data confirmed API's direction but with larger size builds...
Source: Bloomberg
All thanks to a yet another massive positive "adjustment"...
Source: Bloomberg
Even the EIA admits it has lost control of the "adjustment" factorhttps://t.co/QmfTLOS5YC https://t.co/QSAHFnBCRQ
— zerohedge (@zerohedge) June 14, 2023
Despite reports that the Biden admin is looking to buy a 'colossal' 12mm barrels of oil to refill the SPR (100s of millions of barrels drained), they drained 1.9mm barrels last week - the 11th week in a row (for a total drain of over 20 mm barrels)...
Source: Bloomberg
Despite the obvious trend lower in rig counts, US crude production remained at cycle highs...
Source: Bloomberg
WTI was hovering around $70 ahead of the official data and dumped after...
The machines were quick to bite on the dip however and WTI rallied back up to pre-DOE levels...
Finally, IAEA's optimistic outlook for demand this year was balanced out by a bearish forecast for 2024 demand growth, with the IEA expecting a rise of just 0.86-million bpd, while separately saying it sees demand for gasoline beginning to wane this year.
"Growth is set to reverse after 2023 for gasoline and after 2026 for transport fuels overall. These trends are the result of a pivot towards lower-emission sources triggered by the global energy crisis, as well as policy emphasis on energy efficiency improvements and the rapid growth in electric vehicle (EV) sales," the agency noted, as it sees demand as a whole peaking in 2028.
