Prices Rise Again, API Hints at Tight Supplies

Yesterday brought small price builds across the oil complex, clearing the way for some sizable gains this morning. Crude oil, supported by a large inventory draw reported by the API, is trading at $52.54, up 89 cents (+1.7%) since yesterday’s close.

Fuel prices are also on the rise. Diesel prices are $1.8726, up 2.6 cents (+1.4%). Gasoline prices are making waves, up 2.4 cents (+1.7%) to $1.4639 after gaining 2.1 cents yesterday – though they have a ways to go to recover from Monday’s 6.7 cent drop.

The API’s inventory report came out yesterday and was solidly bullish – predicting a sizable crude draw, a surprise gasoline draw, and a smaller than expected diesel build. Given wide divergence between EIA and API data, though, markets are waiting until this morning’s data is published before believing the bullish trend.

The EIA published their monthly STEO yesterday, and you can read some of the highlights here. The EIA’s forecast of $61/bbl Brent crude in 2019 represents a huge reduction in prices, down from last month’s $72/bbl forecast. Still, the overall outlook for 2019 appears more balanced – rather than steady stock builds throughout 2019, the EIA now expects builds in the first half of the year giving way to slight draws in the latter half. Although OPEC committed to a 1.2 MMbpd output reduction, the EIA is only counting on 0.9 MMbpd to be taken off the market, given OPEC’s past struggles to maintain unity.

 

OPEC also released their monthly market report this morning, maintaining largely the same view as last month. Demand growth in 2019 is still expected to be 1.5 MMbpd with economic growth at 3.5% globally. Risk remains skewed lower, given concerns about trade, monetary tightening, and geopolitics. The report noted that given growth in non-OPEC supplies, demand for OPEC oil would be 1 MMbpd below 2018 levels – hence the supply cuts the organization is making.

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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