WTI Extends Losses After Big Surprise Crude, Product Builds

Crude prices slipped lower today with WTI back below $45 as OPEC uncertainty dominated any rejuvenated demand hopes from vaccines.

“The lack of progress from [the] OPEC+ meetings is shaking the confidence of traders, since everyone had assumed that this week’s meeting was just a formality and that the extension of production cuts was a foregone conclusion,” said Manish Raj, chief financial officer at Velandera Energy.

“Continued negotiation among OPEC+ members suggests fragility of the alliance, and hence, it is weighing in on oil prices.”

Until we get that answer from OPEC (on Thursday), inventories will be the short-term driver…

API

• Crude +4.146mm (-1.7mm exp)

• Cushing -132k

• Gasoline +3.402mm (+2mm exp)

• Distillates +334k (+100k exp)

Crude stocks rose a surprising 4.146mm barrels (against expectations of a 1.7mm barrel draw) and both gasoline and distillates also saw big builds…

Source: Bloomberg

WTI hovered around $44.60 ahead of the print, and slid further on the builds…

However,the failure to reach an OPEC+ agreement would illustrate “the difficulty of sustaining the output discipline that we’ve seen since shortly after the coronavirus crisis began,” said Andy Brogan, global oil and gas leader at Ernst & Young. “All of the OPEC producers are under pressure to provide government revenues and no one wants to make a disproportionate sacrifice.”