At last the oil price has come back a bit and for the same reasons as I gave yesterday, inventory stats proved to be a bit of a help but the Chinese data proved that the contraction continues.
So, WTI has finally overtaken Brent with another rise this morning pushing it 20 cents higher. A combination of factors, much discussed here, has been responsible but higher refinery demand, better pipeline facilities and a return to more normal stock levels at Cushing has done the trick.
The market has been a bit puzzled by inventories in the last week or two and I have been closely watching the retail gasoline prices in the USA. Up until this week there has been no sign of a pick-up, either from the alleged economy recovery, which must be happening as tapering is being considered(sic) or from the
Hopefully an earlier blog today after yesterday’s meeting filled day, today half of us are on the road with a client roadshow, the others are at the Oil Council Africa Assembly in Paris, you’ve guessed that I am here in London! The Africa Assembly is even bigger and better attended
It was all about WTI yesterday as the EIA inventory data surprised the market even though a small tip-off had been given by the API stats the night before. Crude oil drew by 6.3m barrels versus consensus analysts’ forecasts/guesses of 400,000 barrels and WTI gained despite the weaker US factory orders particularly in energy products.
The oil price fell whilst I was away with Brent drifting below $100 at one stage after Opec left its production unchanged and the US inventory figures showed higher stockpiles. You will want to know how those brainy analysts in New York did, well they predicted a fall of 377,000 barrels and the actual was a build of 3 million barrels.
Some big picture stuff around the oil price today, the IEA half yearly report is out and concentrates on the rise in production in US shale oil . It suggests that as a result of this, demand for OPEC crude will remain largely unchanged during this period.
So, what can we say now about the oil price? The first thing is that the WTI/Brent differential hit a recent low again last night at $7.79 and whilst there are people out there suggesting it should narrow more we would urge caution.
The trouble with Bank Holiday weekends is that you lose sight of your comparisons as it were! The oil price rose on Friday in New York after the non-farm payrolls were better than expected and February and March were restated upwards as well.
The market turned on a sixpence and rose on the back of an unexpected fall in jobless claims in the US whilst in the Eurozone the ECB cut the refinancing rate by 25 bps.
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