WTI Extends Gains After Another Big Crude Inventory Drawdown
Oil prices jumped to their highest in a year today with WTI topping $55 amid dueling headlines from OPEC+ (lower demand growth outlook but higher compliance with cuts) even as gasoline demand in the US remains muted at best.
“There’s hope around the vaccine rollouts at the same time we’re seeing a lot from the majors and international players about cutting back on production,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy.
“Those two factors are combining to keep us toward the upper end of the range.”
But for tonight, considering that Gulf Coast refinery utilization at 83% is at a nine-year seasonal low (according to the EIA) all eyes are on inventories…
Crude -4.261mm (-2.4mm exp)
Gasoline -240k (+1.5mm exp)
Distillates -1.622mm (-1.3mm exp)
After the prior week’s significant crude draw, analysts expected another significant drop in stocks, and the market did not disappoint with draws across the entire complex…
Gulf Coast refinery utilization at 83% is at a nine-year seasonal low, according to the EIA .
WTI hovered around $54.90 ahead of the print and rallied after the bigger than expected crude draw..
As Bloomberg notes, the rally in headline crude prices and buying binge in physical markets comes amid a markedly tighter structure in the oil futures curve this year. Nearby Brent timespreads are trading in their biggest backwardation in a year – a bullish structure where nearer-dated contracts trade at a premium to later-dated ones – suggesting supply tightness.