FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
96,728,720Confirmed
2,068,341Deaths
69,427,759Recovered
Fetching Location Data…
Advertisement
Advertisement
James Hyerczyk
Crude Oil
Crude Oil

Crude oil futures finished mixed last week with U.S. West Texas Intermediate crude oil closing lower and international-benchmark Brent ending higher. The price divergence could raise concerns with some traders, but can be explained easily so I don’t think it is a major issue.

June WTI crude oil settled at $68.10, down $0.30 or -0.44% and June Brent crude oil settled at $74.64, up $0.58 or +0.78%.

Advertisement
Know where WTI Crude Oil is headed? Take advantage now with 

75% of retail CFD investors lose money

While WTI headed lower for the week, Brent crude oil closed higher for a third week in row. The possibility of supply disruptions in Iran underpinned Brent, while WTI was capped by rising U.S. production. This is what is drove the widening discount between Brent and WTI. Additionally, U.S. crude’s discount to Brent hit its widest since December 28 at $6.74 a barrel.

Weekly June WTI Crude Oil

Consistent Narrative

The underlying narrative remains the same. Prices are being supported by continued adherence to the OPEC-led production cuts, increased demand from Asia, possible supply disruptions in Iran and turmoil in Venezuela.

Gains are being limited by rising U.S. production as shale drillers try to take advantage of higher prices by ramping up activity.

Weekly June Brent Crude Oil
Advertisement

Weekly Recap

The price action was choppy this week with both WTI and Brent posting two-sided moves. Crude oil traded higher on Monday and Tuesday with Brent trading through last week’s high. However, a bigger than expected jump in U.S. inventories sent crude oil futures lower. The selling continued on Wednesday on the initial reaction to the U.S. government inventories report, but the markets finished higher.

U.S. West Texas Intermediate and international-benchmark Brent crude oil posted a reversal to the upside late Wednesday to finish higher for the session following the release of the weekly EIA inventories report. Early in the trading day, prices were driven lower after the report showed an unexpected increase in U.S. crude oil and gasoline inventories.

According to the U.S. Energy Information Administration (EIA), crude inventories rose 2.2 million barrels in the week to April 20, compared with expectations for a decrease of 1.6 million barrels. Gasoline stocks grew by 840,000 barrels, versus forecasts for a 625,000-barrel drop.

Net U.S. crude imports fell last week by 43,000 barrels per day as exports rose nearly 600,000 bpd to a record 2.3 million bpd, according to the EIA data.

Additionally, combined exports of crude and petroleum products hit a weekly record at 8.3 million bpd, of which more than 6 million bpd was from products like gasoline and diesel fuel. Exports of distillate inventories have been strong of late, draining inventories on the East Coast, a traditional parking spot for distillates like jet fuel.

Refinery runs fell by 328,000 bpd and utilization rates fell by 1.6 percentage points to 90.8 percent of total capacity, EIA data showed.

Overall U.S. crude production continued to grow, rising last week to 10.59 million bpd.

Pressuring the market was the rise in gasoline inventories which jumped due to an extraordinary high level of imports. However, tempering the news a little was the record exports of crude oil and distillate fuel last week.

Forecast

Another rise in the U.S. rig count could put pressure on the markets early in the week. According to General Electric’s Baker Hughes energy services firm, U.S. drillers added five oil rigs the week-ending April 27, bringing the total count to 825, the highest level since March 2015.

The key factor that should keep volatility at elevated levels until at least May 12 is whether the Trump Administration will restore sanctions on Iran that were lifted during the Obama Administration after an agreement over its disputed nuclear program.

The fundamentals are bullish so the hedge funds can take their time in deciding how they want to play the next move. The next move will likely be determined by whether the news is strong enough to force the hedge funds to buy strength, or encourage them to buy weakness.

The key event this week could be a surprise early announcement about the Iran sanctions. This is what is likely to drive the volatility. Both futures contracts will rise if the U.S. reimposes the sanctions, but the spread between Brent and WTI should widen on the news.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US