WTI Holds Losses Despite Another Crude Draw

Oil prices slipped to the lower-end of their recent range – WTI back below $70 – shrugging off any ‘war premium’ from Russia’s coup-gate and seemingly weakening on expectations of a more hawkish Fed after strong econ numbers today.

“The market appears to have quickly discounted any meaningful supply risk tied to the short-lived uprising by Russian paramilitary forces over the weekend. That comes amid a broader trend that has seen Russian crude exports frequently come in above expectations over the past year as the country continues to find buying interest from China and other developing markets to counter lost market share in the U.S. and EU,” said Robbie Fraser, manager of global research and analytics at Schneider Electric, in a note.

For now all eyes will be on crude stocks after last week’s unexpected draw…

API

• Crude -2.4mm (-1.47mm exp)

• Cushing +1.45mm

• Gasoline -2.85mm

• Distillates +777k

For the second week in a row, US commercial crude stockpiles were drawn-down (by a greater than expected amount). Stocks at the Cushing hub rose for the 9th week of the last 10…

Source: Bloomberg

WTI was trading around $68 ahead of the print – at the low end of its recent range – and extended losses modestly after the API data…

“Oil is well and truly stuck and rangebound, taking all the news on the chin,” said Ole Hansen, head of commodities strategy at Saxo Bank.

Meanwhile, Bloomberg reports that key nearby timespreads, which help gauge the strength of the oil market, fell deeper into a bearish contango structure on Tuesday. Timespreads will continue to face headwinds due to pessimistic views on demand and high interest rates, Goldman analysts wrote in a note to clients.