Crude oil responds to bullish EIA stock report

Commodities 7 minutes to read

Ole Hansen

Head of Commodity Strategy

Summary:  Crude oil markets are placing far more weight on supply tightening than they are to slowdown-related demand fears.


Crude oil continues to grind higher in response to news flows, which remain overwhelmingly supportive. Worries about growth and future demand for crude oil remain just worries at this stage with the market instead responding, albeit at a relatively slow pace, to the continued tightening on the supply side in response to ongoing production cuts from the Opec+ group of producers as well as another slump from a blacked-out Venezuela.

The Weekly Petroleum Status Report released one hour earlier (in Europe) due to beginning of US summer time added another layer of support after crude oil and gasoline stocks both dropped by more than expected. In addition, crude oil production from the Lower 48 states – primarily shale – was adjusted lower by 100,000 barrels/day. Some of the drop in US oil stocks was probably due to a timing effect following last week’s massive 7 million barrel increase. Overall, however, it is still positive given the current lull in refinery demand as the maintenance season draws to a close.
The EIA report shows no change in the net-import of crude oil with a drop in both imports and exports leaving it unchanged on the week. Imports from key producers were mixed with the much-discussed import from Saudi Arabia rising 250,000 barrels/day to return to the five-year average. Shipments from Venezuela rose by 29,000 b/d but at a dismal 112,000 b/d it is currently trailing the five-year average by 500,000 b/d. Gasoline stocks stayed above the long-term average despite the bigger than expected drop.
The EIA report has sent WTI crude oil up by a buck to the highest level seen in four months. The next major milestone will be $59.63/b, which represents a 50% retracement of the October-December sell-off ahead of the psychologically important $60/b level.
Source: Saxo Bank
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S - Representative Office
Boulevard Plaza - Tower 1
30th floor, office 3002
Dubai Downtown, Burj Khalifa area
Dubai
UAE

UAE

Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.