WTI Extends Losses After Surprise Crude Build
Oil prices pumped’n’dumped today with WTI above $76.50 intraday before falling back (and Brent near 3-year highs above $80 before fading) as a shortfall in global energy supplies is spilling into crude markets.
“It got ugly in the equity space and the interest rate environment got stronger this morning too,” said Bob Yawger, director of the futures division at Mizuho Securities USA.
“Those two facts conspired to tank the market here.”
The latest gains for oil prices have come as part of a broader rally in energy markets, with depleted natural gas inventories and resurgent economic activity sparking fierce competition in Europe and Asia for natural gas to feed their power markets.
“Oil’s move is really to do with the global energy crunch coming out of the gas power market,” said Norbert Rücker, head of economics at Swiss private bank Julius Baer.
“This is now spilling over into the oil market because of the expectation that this energy scarcity means we’re going to use oil for spillover demand.”
In some power plants, oil can be used to generate electricity when gas prices surge.
Losses in U.S. Gulf of Mexico production following the impact of Hurricane Ida are also supportive of higher prices in the short-term.
Crude +4.127mm (-2.5mm exp)
Analysts expected an 8th straight week of crude inventory draws, but were surprised when API reported a 4.127mm build. In fact, the entire complex saw inventories rise…
WTI was hovering just below $75 ahead of the API print and extended losses after the surprise build…
Not everyone is bullish from here. “OPEC is still ramping up production and [the market is] getting frothy but by next year we have confidence that we see much lower prices,” said Julius Baer’s Mr. Rücker.
Tue, 09/28/2021 – 16:34
via ZeroHedge News https://ift.tt/2ZGLWUI Tyler Durden