Oil prices exploded higher today, helped by a weaker dollar, after the U.S. announced plans to intensify sanctions on Iran and Russia said it would trim production in September. But after last week’s huge draws, all eyes are back on the inventory picture after a delay due to the Labor Day holiday this week…
“Any kind of draw would be good,” as this would mean last week’s decline wasn’t a one-week event, according to Jan Stuart, global energy economist at Cornerstone Macro LLC.
Crude 400k (-2mm exp)
Cushing -238k (-2.4mm exp)
Gasoline -877k (-1.5mm exp)
Distillates -1.2mm ( 500k exp)
After last week’s yuuge draw, analysts continued to expect another draw for crude but a surprise build of 400k barrels spooked traders…
“Right now, the market isn’t only following fundamentals. It’s very perceptive to the ongoing trade war,” and that’s affecting demand, said Paola Rodriguez-Masiu, an analyst at Rystad Energy.
“You can’t discard the possibility that China and the U.S. will continue to raise the levies again,” she added.
WTI ramped all the way up to $56.50 at the highs today…
And the reaction to the surprise build was a very quick pop followed by a big drop…
“Oil prices are recovering from the sell-off the last few days,” with additional help from predictions for another drawdown in U.S. crude inventories and comments on Russia’s production this month, according to Leo Mariani, an analyst at KeyBanc Capital Markets.