WTI Extends Gains After Huge Surprise Crude Draw

Oil surged higher today on rising geopolitical tensions – and the fact that it appears Russia is having issues finding a buyer for its Urals crude (offering a record, massive $18.60 discount) – with WTI topping $100 (almost $107 intraday),  amid fears that the conflict could further disrupt a tight global energy market.

“Current oil price differentials are reflecting a clear unwillingness to take Russian crude,” JPMorgan said in a note to clients Tuesday, adding that “key European financiers to commodity trade houses have already begun curbing financing for commodities trades, and Chinese banks are also pulling back.”

The surge in prices came despite IEA members agreeing to release 60 million barrels from global reserves.

All eyes for now will be on the inventory data to see if any of the geopolitical tensions are starting to impact yet…

API

• Crude -6.1mm (+2.8mm exp) – biggest draw since September

• Cushing -1mm

• Gasoline -2.5mm

• Distillates +0.4mm

Crude inventories saw a huge drawdown last week (the most since September) according to API. This was a major divergence from the expected build…

Source: Bloomberg

WTI was hovering around $105.25 ahead of the API report and extended gains, back to the highs of the day, after the report…