API reports growth in USA oil inventories

API reports growth in USA oil inventories

USA production has picked up while imports have slowed down.

Last week, the US Energy Information Administration said there was a surprise drop in oil reserves against a background of lower imports and higher exports. Prices on Friday rose 78 cents, or 1.2%, to settle at $63.55, the highest in more than two weeks.

The API report also reported that gasoline supplies rose by 1.91 million barrels, a fourth straight increase if EIA data confirms it.

Still, OPEC and its allies seem unfazed by USA shale and continue to send messages to the market that they will do "whatever it takes" to balance the oil inventories and that production cuts are here to stay until the end of 2018.

USA light crude CLc1 is forecast to average $58.88 a barrel in 2018, up from $58.11 in the January poll.

Market participants were expecting a build in USA oil stocks of around 2.1 million barrels, according to an S&P Global Platts preview of the EIA oil stocks data.

Brent-WTI Spread at 3.65 may test at 3.70/75 from where another dip looks likely in here. First, U.S. crude exports remain elevated, although down a bit from the fourth quarter.

Arab News quoted Mazrouei as saying that cooperation between oil producers including Russian Federation had reached levels that were "more than expected". For instance, the Diamond pipeline started up in December, opening a route from Cushing, OK to Memphis, TN.

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The stronger dollar makes commodities denominated in the USA currency more expensive for holders of other currencies.

The entire energy complex was led lower by gasoline futures after a surprise build in US gasoline stocks, which rose by 2.5 million barrels, compared with expectations for a 190,000-barrel drawdown.

One key oil supply source is the USA; we see the production of oil ramping up very quickly.

These upticks were supported by comments from Saudi Energy Minister Khalid al-Falih, who announced on Saturday (February 24) that the country's crude production from January to March will be well below output caps, with exports averaging less than 7 million barrels per day. The "price gap between the two oil types has narrowed to its lowest level in six months".

The market was also pressured by the rising dollar and stock markets, said Flynn.

But there's one thing that mainstream seems to be getting wrong.

WTI light sweet oil was down 11 cents at USD62.87 a barrel, having traded between USD60 and USD66 for the past month.

Most of the drawdown has come from the liquidation of bullish long positions rather than the establishment of new bearish short ones and it has been proportionately greater in fuels rather than crude. Plus, surging upstream production doesn't hurt.

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