WTI Extends Gains After Huge Crude Draw

Oil prices rallied to one-week highs after China economic data provided some hope for a rebound in demand, which outweighed any anxiety caused by the EIA who warned the market outlook has grown “even more fragile” with a resurgence of the pandemic.

Despite how “depressing the IEA report was, there’s hopeful signs this morning about positive sentiment in the manufacturing sector,” said John Kilduff, a partner at Again Capital LLC.

“Beyond transportation, you really need industrial demand to kick in, factories to be hopping, for there to be a market increase in consumption.”

All eyes again on inventories for the next move.

API

• Crude -9.517mm (+1.27mm exp)

• Cushing -789k (+2.608mm) exp)

• Gasoline +3.762mm (-160k exp)

• Distillates -1.123mm (+600k exp)

Against expectations of a modest build, API reported a major 9.5mm barrel crude inventory draw last week (and a surprise gasoline build)…

Source: Bloomberg

WTI rallied back above $38 intraday today and held around $38.30 ahead of the print, and extended gains after the big crude draw…

“You’re probably going to see steady increases, especially in crude, for the next couple of months, unless you get a real pickup in economic activity in the U.S.,” said Michael Lynch, president of Strategic Energy & Economic Research. “It’s the usual seasonal build, compounded by the fact that demand still remains” below normal.