Energy Analytics

Crude Oil Inventory Draw First Time in 3 Weeks Lends Some Support to Prices

byEnverus

[contextly_auto_sidebar]

US crude oil stocks posted a decrease of 2.7 MMBbl from last week. Gasoline and distillate inventories increased by 0.3 MMBbl and 2.6 MMBbl, respectively. Yesterday afternoon, API reported a crude oil draw of 3.5 MMBbl, while reporting a gasoline draw of 0.4 MMBbl and a distillate build of 1.8 MMBbl. Analysts were expecting a crude oil draw of 1.9 MMBbl. The most important number to keep an eye on, total petroleum inventories, posted an increase of 4.0 MMBbl. For a summary of the crude oil and petroleum product stock movements, see the table below.

US crude oil production remained unchanged last week, per the EIA. Crude oil imports were down 0.49 MMBbl/d last week, to an average of 7.2 MMBbl/d. Refinery inputs averaged 17.7 MMBbl/d (0.40 MMBbl/d more than last week’s average), leading to a utilization rate of 95.9%. The crude oil draw for the first time in three weeks brought some support to prices, but the total petroleum stocks build is limiting the price gain. Prompt-month WTI was trading up $0.30/Bbl, at $56.43/Bbl, at the time of writing.

Prices dipped below the $55/Bbl level last Wednesday, after disappointing global economic data as well as the inversion of US bonds, which increased concerns of a possible recession. Since then prices have recovered some of their losses due to a slight softening of the trade war between the US and China. The optimism regarding a possible thaw of US–China tensions came after US President Donald Trump remarked that he would be talking with Chinese President Xi Jinping to discuss trade issues, and was furthered bolstered by the US stating it would extend a reprieve that permits China’s Huawei Technologies to buy components from US companies. The hopes that major economies around the globe will take stimulus measures to battle the economic slowdown also gave some support to prices. Although there is some hope that US–China tensions will ease off and major governments will become more aggressive in delivering stimulus, the current gloomy outlook on global economic health and demand projections, as well as the warnings from OPEC and IEA reports that an oil glut in 2020 is likely, are still keeping the pressure on prices and limiting any significant gains.

In addition to expectations of greater monetary stimulus by central banks across the globe to battle a possible recession, prices also got support from a drone attack by the Houthi group on an oilfield in eastern Saudi Arabia on Saturday. The attack caused a fire at a gas plant, adding more concern to existing tensions in the Middle East and possible supply disruptions in the region. However, the effect on prices were minimal, as Saudi Aramco stated that oil production was not affected, and because the market seems to keep its focus on the gloomy and further-deteriorating global economic health and demand projections.

Evidence is mounting that without a large reduction in output from OPEC or some level of conflict occurring with Iran, price rallies (up to $61 to $64) will be sold until the tariff issues between the US and China come to some sort of pause or solution. The market remains within a range of $50 to $61. Expect this type of environment to continue until further evidence of solutions occur. That said, due to the precarious nature of the tariff struggle, there remains the possibility of China ignoring the bans on buying Iranian crude (in place of US crude) as a retaliatory posture, likely pressuring prices below $50. This event could flood the global crude market going into an already oversupplied 2020.

Petroleum Stocks Chart

Enverus

Enverus

Energy’s most trusted SaaS platform — creating intelligent connections that uncover insights and opportunities to deliver extraordinary outcomes.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

energy-transition
Energy Transition
ByCarson Kearl

In a world where energy value can make up a small portion of the revenue stream from emerging business models, what else is at play? Enverus Intelligence Research® views effective energy transition business as taking advantage of two key additive...

field-representative
Intelligence Oilfield Services
ByErin Faulkner

Permitting information for oil and gas wells is one of the most readily available and least lagged pieces of data on industry activity, but it is often seen as a poor indicator of future drilling activity.

Enverus Press Release - Exploring falling rigs and rising production
Energy Analytics Minerals
ByEnverus

While horizontal drilling and hydraulic fracturing significantly enhance well productivity, they have had the opposite effect on the land department.

operators
Intelligence
ByJoseph Gyure, Editor, Enverus Intelligence

All seven regions covered by the Enverus Day Rate Survey saw rates rise sequentially for the second time in three months in January as confidence started to strengthen among U.S. land drilling contractors.

accurate-grid-forecastin
Energy Transition Intelligence
ByJoseph Gyure, Editor, Enverus Intelligence

Ørsted took a blade to its project pipeline, reducing its ambition to 35-38 GW of installed capacity by 2030 from the previous 50 GW.

ofs-blog
Intelligence
ByJoseph Gyure, Editor, Enverus Intelligence

SLB has reaffirmed its 2024 financial guidance, part of an effort by international oilfield services companies to reassure investors after the Saudi Ministry of Energy called off plans to increase its maximum sustainable capacity by 1 MMbo/d to 13 MMbo/d...

EV-parent-image-4
Analyst Takes Energy Transition
ByEnverus

Despite the relatively scant incentives for buying an EV in the U.S. compared to other countries, the U.S. Environmental Protection Agency (EPA) presented its plan in 2023 to tighten tailpipe emissions regulations.

Enverus Blog - Increase visibility and efficiency with OpenTicket Mobile digital field ticketing software
Trading and Risk
ByEnverus

Amid significant volatility in global energy markets, U.S. President Joe Biden’s decision to temporarily halt approvals for pending liquefied natural gas (LNG) projects seems to defy conventional trading wisdom. This audacious move has given rise to a variety of viewpoints...

Enverus Blog
Intelligence Trading and Risk
ByEnverus

In the ever-changing energy landscape, understanding market fluctuations, weather conditions and system resilience is paramount when factoring ideas for trading opportunities.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Get Energy Transition Research updates straight to your inbox by filling out the form below.

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert