Reports of the Chinese being willing to accept a partial trade deal are lifting markets this morning. WTI Crude is trading at $53.36, a gain of 73 cents.
Fuel is up this morning. The API reported larger-than-expected draws in products are helping to buoy prices. Diesel is trading at $1.9344, a gain of 2.4 cents. Gasoline is trading at $1.6042, a gain of 2.3 cents.
On Tuesday, oil settled lower as traders considered the impact of the White House blacklisting more Chinese companies. However, this morning oil is trading higher as some reports suggest that the Chinese would be willing to accept a partial trade deal with the U.S. – possibly increasing annual purchases of agricultural products in order to secure an interim trade deal with Washington.
The API’s data last night:
The API reported a larger-than-expected build for crude of 4.1 MMbbls versus an expected build of 1.4 MMbbls. This reported build does not appear to be the focus of markets as prices are up. At Cushing, stocks rose for the third week in a row with a build of 1.2 MMbbls. Gasoline had a larger-than-expected draw reported by the API. Diesel also had a larger-than-expected draw.
The Short-Term Energy Outlook released by the EIA yesterday forecast U.S. crude production to average 12.3 MMbpd in 2019, up 1.3 MMbpd from the 2018 level. In 2020, the EIA sees U.S. oil production rising by 0.9MMbpd to an annual average of 13.2MMbpd. On the demand side, the EIA cut its 2020 world oil demand growth forecast by 100 Kbpd to 1.3 MMbpd.
In the Middle East, Turkish forces have crossed into Syria in preparation for a campaign against Kurdish forces. Earlier, the Trump administration said that U.S. forces would not stand in the way of a Turkish military excursion deeper into Syria. The question remains how this action will impact the tensions in the region and the risk premium applied to crude.