Oil spiked almost $3 intraday (biggest jump in 5 months), surging higher after trading with a $51 handle all the way up to above $54 after OPEC and its allies moved closer to agreeing on a meeting date to extend supply cuts and Mario Draghi raised hope for even more stimulus to pump up demand. Prices got a further boost after Trump and Xi confirmed they will meet in Japan next week to relaunch trade talks after a month-long stalemate.
“Tomorrow’s Fed announcement after a two-day meeting may set the stage for oil for the rest of the month," said Phil Flynn, senior market analyst at Price Futures Group. “If they come off very dovish than oil should rally hard."
Crude -812k (-1.75mm exp)
Cushing +520k (+30k exp)
Gasoline +1.46mm (+900k exp)
Distillates -50k (+700k exp)
After the two previous weeks surprised traders with notable builds (in crude and products), traders once again expect a draw in the latest week and API confirmed a modest 812k drop in crude inventories. 5th weekly build in gasoline inventories however.
After its biggest day in 5 months, WTI hovered around $54.20 ahead of the API data and barely budged on the print.
Additionally, Bloomberg reports that an OPEC committee sees global oil inventories contracting by almost 500,000 barrels a day if the group continues restraining supply in the second half of the year, a delegate said.
The estimate by the Economic Commission Board suggests the Organization of Petroleum Exporting Countries and its partners have room to boost production from current levels and still keep the market in balance. Members of the coalition, known as OPEC+, are due to decide in the coming weeks whether to persevere with the cuts as a shaky demand outlook weakens crude prices.