Oil Rebounds On Bullish Data, OPEC Meeting Date Set, Trade-Optimism Fuels Demand HopesCrude oil prices were moving lower in Wednesday trading until bullish inventory data hit the market. U.S. crude oil stockpiles were reported to have fallen by -3.106 million barrels according to the EIA. The draw is three times the expected reduction and helped WTI Recover some of the mornings losses. Total U.S. oil inventory is running about 7.0% above the five-year average for this time of year.
The oil inventory data was compounded by unexpected draws in distillates and gasoline that suggest rising U.S. production isn’t keeping up with demand. Traders had been expecting modest builds of inventory for both gasoline and distillates.
Declining imports of oil and fuel stocks contributed to this week’s decline in net inventory. Imports fell by -144,000 barrels per day bringing the YOY total to -7.6% over last year. Refinery runs increased over the past week which may offset the unexpected declines in gasoline and distillates in the coming weeks. Despite the drawdown, the total amount of energy product delivered in the U.S. is up 1.8% YOY over the trailing four-week period. This increase is led by a 2.0% increase in gasoline product delivered and a 4.0% increase in distillate products.
OPEC Sets Meeting Date
OPEC has finally set the date for its next policy meeting. The energy cartel has been wrangling over when it would meet to discuss the future of production caps put in place last year. The group is slated to meet in two weeks, July 1st, with a follow meeting with the OPEC+ nations the next day. At present, the cartel has cut production by 1.2 million barrels per day from nominal levels. Saudi Arabia has already come out in support of extending or deepening cuts whose purpose is to support prices. The cartel is not expected to lift the production cap at this meeting.
Trade-Optimism Fuels Demand Hopes
A series of Tweet’s from U.S. President Donald Trump on Tuesday have lifted optimism a trade-deal will be reached soon. The President said he had a long talk with Chinese President Xi Jinping and that the two will be meeting at the G-20 in Japan. The G-20 meeting is scheduled for June 28-29 in Osaka, Japan and provides neutral ground for the two to meet. Lingering trade tensions have sapped global growth acceleration and in turn demand for oil, a resolution of those tensions would be a bullish catalyst for oil prices.
The article was written by Bharat Gohri, Director of Sales and Retention at easyMarkets