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Vandana Hari

November 22, 2017

Crude jumps early wed after API reports major draw in US crude stocks – Vandana Hari

1. Brent and WTI futures price were marching up in early Asian trading Wednesday after closing modestly higher Tuesday, in response to the the American Petroleum Institute reporting a sizeable decline of 6.36 million barrels in commercial US crude inventories for the week ended November 17, much larger than analyst expectations. The data’s impact on market sentiment is also somewhat amplified by prevailing bullishness around the OPEC/non-OPEC production cuts, which are expected to be rolled over beyond March 2018 when ministers meet next week in Vienna. The API data was released after Tuesday’s market close in the West.

2. The industry body reported a modest build of 869,000 barrels in gasoline stocks, which is not much of a dampener because the transportation fuel takes a back seat after the end of the traditional US summer driving demand season. With the approach of winter, market attention is focused on distillate stocks, which include heating oil. API reported a draw of 1.67 million barrels in heating oil stocks, which adds to the bullish narrative from US stocks data.

3. The latest official stocks, consumption and trade data for last week from the Energy Information Administration will be released later Wednesday, at 10.30 am ET. If it confirms a large crude draw, crude futures could get another boost, though it could be a limited one if much of the expectation is already factored in over the next few hours, in response to the API data. If the EIA data turns out to be at odds with the API’s crude and distillate figures, a downward correction could be expected.

4. The market continues to closely tune in to signals from the Saudis, the Russians and other producers in the OPEC/non-OPEC agreements to curb production by around 1.17 million b/d. Russia last week expressed doubt that a rollover of the agreement beyond March 2018 needs to be agreed at the upcoming ministerial meeting November 30, but Saudi Arabia, chief architect of the production restraint policy adopted last year, appears convinced that the cuts will need to be in place for much longer. Expectations from next week’s meeting have been swaying in recent days, but appear to have settled on the side of an agreement for a rollover for now.

5. Meanwhile, the spread between front-month WTI and Brent futures has been narrowing since last Thursday and crunched to minus $5.74/barrel at Tuesday’s close, the narrowest in a month. Simultaneously, the contango at the front end of the WTI futures curve has eased considerably, while the backwardation from the third month out, the March 2018 contract, has strengthened.

6. The spread between the front and the second month WTI futures or M1/M2 narrowed sharply to a contango of 9 cents Tuesday from a range of minus 20-30 cents for the past several weeks. The M1/M6 spread flipped into a backwardation of 26 cents from a contango of 44 cents. The M1/M12 backwardation expanded to $2.23/barrel, the strongest year-to-date. Backwardation, a market condition in which a commodity fetches a higher price for prompt delivery compared with deferred delivery, typically coincides with a drawdown of inventories as producers have a higher incentive to sell in the spot market than storing oil for delivery at a future date.

Data In Sight

Vandana Hari

Founder, Vanda Insights
Singapore

Crude InSight – November 22, 2017
Crude InSight – November 21, 2017
Crude InSight – November 20, 2017
Crude InSight – November 17, 2017
Crude InSight – November 16, 2017
Crude InSight – November 15, 2017
Crude InSight – November 14, 2017
Crude InSight – November 13, 2017
Crude InSight – November 10, 2017
Crude InSight – November 9, 2017
Crude InSight – November 8, 2017
Crude InSight – November 7, 2017
Crude InSight – November 6, 2017
Crude InSight – November 3, 2017
Crude InSight – November 2, 2017
Crude InSight – November 1, 2017
Crude InSight – October 31, 2017
Crude InSight – October 30, 2017
Crude InSight – October 27, 2017
Crude InSight – October 26, 2017
Crude InSight – October 24, 2017
Crude InSight – October 23, 2017
Crude InSight – October 20, 2017
Crude InSight – October 19, 2017
Crude InSight – October 18, 2017
Crude InSight – October 17, 2017
Crude InSight – October 16, 2017
Crude InSight – October 13, 2017
Crude InSight – October 12, 2017
Crude InSight – October 11, 2017
Crude InSight – October 10, 2017
Crude InSight – October 9, 2017
Crude InSight – October 6, 2017
Crude InSight – October 5, 2017
Crude InSight – October 4, 2017
Crude InSight – October 3, 2017
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Crude InSight – September 29, 2017
Crude InSight – September 28, 2017
Crude InSight – September 25, 2017
Crude InSight – September 22, 2017
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Crude InSight – September 20, 2017
Crude InSight – September 19, 2017
Crude InSight – September 18, 2017
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Crude InSight – September 14, 2017
Crude InSight – September 13, 2017
Crude InSight – September 12, 2017
Crude InSight – September 11, 2017
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Crude InSight – August 31, 2017
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Crude InSight – August 25, 2017
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Crude InSight – August 18, 2017
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Crude InSight – July 31, 2017
Crude InSight – July 28, 2017
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Crude InSight – July 25, 2017
Crude InSight – July 24, 2017
VIEWS ON NEWS: OIL THIS WEEK – July 8, 2017
Crude InSight – July 6, 2017
Crude InSight – July 5, 2017
Crude InSight – July 4, 2017
Crude InSight – July 3, 2017
Crude InSight – June 30, 2017
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Crude InSight – June 19, 2017
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Crude InSight – June 13, 2017
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Crude InSight – June 2, 2017
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Crude InSight – May 19, 2017
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Crude InSight – May 12, 2017
Crude InSight – May 11, 2017
Crude InSight – May 10, 2017
Crude InSight – May 9, 2017
Crude InSight – May 8, 2017
VIEWS ON NEWS: OIL THIS WEEK – May 5, 2017
Crude InSight – May 5, 2017
Crude InSight – May 4, 2017
Crude InSight – May 3, 2017
Crude InSight – May 2, 2017
VIEWS ON NEWS: OIL THIS WEEK – April 28, 2017
Crude InSight – April 28, 2017
Crude InSight – April 27, 2017
Crude InSight – April 26, 2017
Crude InSight – April 25, 2017
Crude InSight – April 24, 2017
VIEWS ON NEWS: OIL THIS WEEK – April 21, 2017
Crude InSight – April 21, 2017
Crude InSight – April 20, 2017
Crude InSight – April 19, 2017
Crude InSight – April 18, 2017
Crude InSight – April 17, 2017
VIEWS ON NEWS: OIL THIS WEEK – April 14, 2017
Crude InSight – April 13, 2017
Crude InSight – April 12, 2017
Crude InSight – April 11, 2017
Crude InSight – April 10, 2017
Crude InSight – April 3, 2017
VIEWS ON NEWS: OIL THIS WEEK – March 31, 2017
Crude InSight – March 31, 2017
Crude InSight – March 30, 2017
Crude InSight – March 29, 2017
Crude InSight – March 28, 2017
Crude InSight – March 27, 2017
VIEWS ON NEWS: OIL THIS WEEK – March 24, 2017
Crude InSight – March 24, 2017
Crude InSight – March 23, 2017
Crude InSight – March 22, 2017
Crude InSight – March 21, 2017
Crude InSight – March 20, 2017
VIEWS ON NEWS: OIL THIS WEEK – March 17, 2017
Crude InSight – March 17, 2017
Crude InSight – March 16, 2017
Crude InSight – March 15, 2017
Crude InSight – March 14, 2017
Crude InSight – March 13, 2017
VIEWS ON NEWS: OIL THIS WEEK – March 10, 2017
Crude InSight – March 9, 2017
Crude InSight – March 7, 2017
Crude InSight – March 6, 2017
VIEWS ON NEWS: OIL THIS WEEK – March 3, 2017
Crude InSight – March 3, 2017
Crude InSight – March 2, 2017
Crude InSight – March 1, 2017
Crude InSight – February 28, 2017
Crude InSight – February 27, 2017
VIEWS ON NEWS: OIL THIS WEEK – February 24, 2017
Crude InSight – February 24, 2017
Crude InSight – February 23, 2017
Crude InSight – February 22, 2017
Crude InSight – February 21, 2017
Crude InSight – February 9, 2017
Crude InSight – February 8, 2017
Crude InSight – February 7, 2017
Crude InSight – February 6, 2017
VIEWS ON NEWS: OIL THIS WEEK – February 3, 2017
Crude InSight – February 3, 2017
Crude InSight – February 2, 2017
Crude InSight – February 1, 2017
Crude InSight – January 31, 2017
VIEWS ON NEWS: OIL THIS WEEK – January 27, 2017
Crude InSight – January 27, 2017
Crude InSight – January 26, 2017
Crude InSight – January 25, 2017
Crude InSight – January 24, 2017
Crude InSight – January 23, 2017
VIEWS ON NEWS: OIL THIS WEEK – January 20, 2017
Crude InSight – January 17, 2017
Crude InSight – January 16, 2017
VIEWS ON NEWS: OIL THIS WEEK – January 13, 2017
Crude InSight – January 13, 2017
Crude InSight – January 12, 2017
Crude InSight – January 9, 2017
VIEWS ON NEWS: CRUDE COMPASS, Special Issue – January 6, 2017
Crude InSight – January 6, 2017
Crude InSight – January 5, 2017
Crude InSight – January 4, 2017
Crude InSight – January 3, 2017
Crude InSight – December 15, 2016
Crude InSight – December 14, 2016
Crude InSight – December 13, 2016
Crude InSight – December 12, 2016
VIEWS ON NEWS: OIL THIS WEEK – December 9, 2016
Crude InSight – December 9, 2016
Crude InSight – December 8, 2016
Crude InSight – December 7, 2016
Crude InSight – December 6, 2016
Crude InSight – December 5, 2016
VIEWS ON NEWS: OIL THIS WEEK – December 2, 2016
Crude InSight – December 2, 2016
Crude InSight – December 1, 2016
Crude InSight – November 30, 2016
Crude InSight – November 29, 2016
Crude InSight – November 28, 2016
VIEWS ON NEWS: OIL THIS WEEK – November 25, 2016
Crude InSight – November 25, 2016
Crude InSight – November 24, 2016
Crude InSight – November 23, 2016
Crude InSight – November 22, 2016
Crude InSight – November 21, 2016
VIEWS ON NEWS: OIL THIS WEEK – November 18, 2016
Crude InSight – November 18, 2016
Crude InSight – November 17, 2016
Crude InSight – November 16, 2016
Crude InSight – November 15, 2016
Crude InSight – November 14, 2016
VIEWS ON NEWS: OIL THIS WEEK – November 11, 2016
Crude InSight – November 11, 2016
Crude InSight – November 10, 2016
Crude InSight – November 9, 2016
Crude InSight – November 8, 2016
Crude InSight – November 7, 2016
VIEWS ON NEWS: OIL THIS WEEK – November 4, 2016
Crude InSight – November 4, 2016
Crude InSight – November 3, 2016
Crude InSight – November 2, 2016
Crude InSight – November 1, 2016
VIEWS ON NEWS: OIL THIS WEEK – October 28, 2016
Crude InSight – October 28, 2016
Crude InSight – October 27, 2016
Crude InSight – October 26, 2016
Crude InSight – October 25, 2016
Crude InSight – October 24, 2016
VIEWS ON NEWS: OIL THIS WEEK – October 21, 2016
Crude InSight – October 21, 2016
Crude InSight – October 20, 2016
Crude InSight – October 19, 2016
Crude InSight – October 18, 2016
Crude InSight – October 17, 2016
VIEWS ON NEWS: OIL THIS WEEK – October 14, 2016
VIEWS ON NEWS: OIL THIS WEEK – October 07, 2016
VIEWS ON NEWS: OIL THIS WEEK – September 23, 2016
VIEWS ON NEWS: OIL THIS WEEK – September 16, 2016
VIEWS ON NEWS: OIL THIS WEEK – September 09, 2016
VIEWS ON NEWS: OIL THIS WEEK – September 02, 2016
VIEWS ON NEWS: OIL THIS WEEK – August 26, 2016