Oil prices are holding on to recent gains this morning – trading at 10-month highs after API’s reported big crude and gasoline draw – on the heels of OPEC+ production cuts and Chinese demand.
Additionally, Aramco raised its prices for US and Asian buyers, as Saudi Arabia looks to draw crude out of storage by under-supplying the market to help boost prices.
API
-
Crude -5.2mm (-2.1mm exp)
-
Cushing -1.4mm
-
Gasoline -5.09mm (-1.2mm exp) – biggest draw since March
-
Distillates +310k (-200k exp)
DOE
-
Crude -6.3mm (-2.1mm exp)
-
Cushing -1.75mm
-
Gasoline -2.67mm (-1.2mm exp) – biggest draw since May
-
Distillates +679k (-200k exp)
Confirming API’s report, the official data shows large draws in crude and gasoline inventories and another big decline in stocks at the Cushing hub…
Source: Bloomberg
The Biden admin added to the SPR for the 5th straight week (a still tiny 798k barrels)…
US Crude stockpiles fell further – to their lowest since early December – and are well below their five-year average for this time of year as the summer driving season ends.
Source: Bloomberg
Including the SPR, this is the lowest level of total crude inventories in America since 1985…
Source: Bloomberg
US Crude production continues to be decoupled (at post-COVID highs) from the rig count…
Source: Bloomberg
WTI was hovering around $87.50 ahead of the official data and held those gains…
“The notion of $100/bbl has evolved from completely unimaginable a few short months ago, to within striking (or hyping) distance today,” analysts including Michael Tran and Helima Croft said in a note.
A $100/bbl figure is “far from a base-case scenario for us, but we have learned to respect that this oil market has evolved into as much of a momentum-based market as it is a fundamentally based one,” they said in the Sept. 7 report.
Of course, this all leaves President Biden with a problem… gas pump-prices are near the highest level ever for this time of year.
Supply is unlikely to increase any time soon, with refiners entering fall turnaround period and with much higher diesel margins ensuring every fuelmaker is prioritizing distillates over gasoline output.
And higher pump-prices are highly correlated with peoples’ perceptions of inflation – good luck Chair Powell.
