Crude prices climbed to new three year highs during yesterday’s sessions on what appears to be geopolitical risk premium, while inventory builds in the US where dismissed and failed to impact the rally of benchmarks. Brent crude rose 1.44% yesterday, to reach $72.06/bbl, while WTI, rallied 2% to $66.79/bbl, dismissing a bearish weekly EIA report, which showed higher output, lower exports and rising crude stockpiles.
US crude stocks were reported at 428.64 million bbls for the previous week, a gain of 3.3 million bbls. Levels moved in contrast to analyst expectations of a minor weekly decline of 189,000 bbls. The build is against seasonal expectations as refinery utilisation has returned to early January levels, ahead of the turnaround period, adding a bearish note to the US supply-demand balance.
Supplies in the US soared to 19.17 million bpd last week, buoyed by a weekly increase of 752,000 bpd in crude imports, while production also rose by 65,000 bpd w-o-w to reach 10.53 million bpd.
Implied demand declined by 887,000 bpd w-o-w to stand at 18.22 million bpd, as crude exports were trimmed to 1.2 million bpd, almost one million bpd lower w-o-w. Refinery input rose to 17.02 million bpd, up by 83,000 bpd w-o-w. Motor gasoline inventories were seen up by 458,000 bbls w-o-w, while distillates dropped by more than one million bbls.
The Oil Research Team, EMEA
Supply Chain & Commodities Research