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19 Jun 2017 10:30
Crude prices default to decline as new week begins in Asia – Vandana Hari
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1. Crude futures were drifting lower early Monday in Asia, following what has now become almost a default direction in the absence of any fresh cues to lend momentum. Profit-taking following modest gains in Friday’s session and renewed bearishness over the rebalancing of the global market after yet another week of rising oil rig count in the US were likely in play.

2. Prices were pounded to fresh six-month lows last week after the Energy Information Administration reported a substantial build of nearly 2.1 million barrels in commercial gasoline inventories and a drop of 48,000 b/d in gasoline consumption for the week ended June 9, the second successive weekly drop. Though the EIA reported a draw of 1.66 million barrels in commercial crude stocks, it was overshadowed by the negative sentiment from the gasoline data, especially coming in the midst of the country’s peak driving demand season.

3. The latest monthly data on OECD oil inventories also disappointed last week, with the International Energy Agency reporting that oil stocks in the developed world rose by more than the seasonal norm in April, and might have remained flat through May. Overall, OECD inventories rose by an average 360,000 b/d over January-April, it said. Market participants had been anticipating second-quarter data to show a drain in the bloated global inventories in response to the 1.74 million b/d of OPEC/non-OPEC cuts in force since the start of January.

4. The US added 6 more oil drilling rigs in the week ended June 16, according to Baker Hughes data. This marks a year of a near-continuous rise in the weekly oil rig count in the country. Tight oil production from the country’s shale plays has been steadily rising since earlier this year and helped overall output climb to 9.33 million b/d in the week to June 9, about 560,000 b/d higher than at the end of December.

5. While the stubborn inventory build and the rise in US production continue to be major bearish factors in the background, crude prices are expected to return to tracking the latest US weekly oil stocks and gasoline demand data, due out from the American Petroleum Institute and the EIA on Tuesday and Wednesday.



Data In Sight



Vandana Hari

Founder, Vanda Insightss
Singapore

 

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