Update (1100ET): Bloomberg reports that the biggest producers in OPEC+ aren’t pushing for deeper oil-supply cuts when the group meets next month, according to delegates across the coalition.
OPEC is anticipating a supply glut in the first half of next year and prices are already lower than most members need to balance their budgets.
And WTI is extending losses from the inventory build.
* * *
As we detailed earlier, a bigger than expected crude build reported by API overnight sparked selling in oil prices but since the US equity market opened, WTI has been panic-bid presumably on yet another round of optimism that trade tensions between the U.S. and China are easing, potentially alleviating downward pressure on the global economy.
Crude +4.26mm (+2mm exp)
Crude +7.929mm (+2mm exp)
For the second week in a row, crude inventories rose significantly (along with stocks at Cushing) as product inventories dropped for the 6th straight week…
US crude production hovered near record highs despite the rapid decline in US oil rig counts…
WTI traded around $57.60 ahead of the DOE data but tumbled on the big build…
Bloomberg Intelligence’s Senior Energy Analyst Vince Piazza has some words of warning:
“Optimism on trade, economic growth and decelerating supply is supporting crude benchmarks, but we believe that enthusiasm is premature to say the least. WTI remains mired below $60, and efficiency gains combined with cost deflation could keep U.S. output elevated without requiring additional spending by E&Ps.”
Finally, as a reminder, the U.S. registered its first petroleum trade surplus in over four decades in September as production surged to a record.
Better keep those rates low Mr.Powell to keep the shale dream alive.
Wed, 11/06/2019 – 11:02
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Author: Tyler Durden