WTI extended gains overnight, after dipping on a surprise crude build reported by API, pushing to 8-month highs above $45 on mounting optimism that recent breakthroughs on a Covid-19 vaccine will lead to a swift recovery in global energy demand next year.
“The recent news around Covid-19 vaccines has boosted crude prices as markets start to look to a return to some sort of normality in 2021,” said HSBC Bank analyst Gordon Gray. “We expect OPEC+ to err on the side of caution as it evaluates how the market evolves.”
Notably, prices have also been supported by renewed geopolitical tensions, with recent attacks on a fuel depot in the Saudi city of Jeddah and on an oil tanker in the Red Sea.
Crude +3.8mm (-300k exp)
Official inventory data flipped the script from API with a 754k draw (vs 3.8mm build). Gasoline stocks rose more than expected (for the second week in a row), which is worrisome…
Crude production rebounded from storm shut-ins…
WTI was hovering around $45.30 ahead of the official inventory data, and limped modestly lower after the print…
Bloomberg Intelligence Energy Analyst Fernando Valle notes that gasoline-demand headwinds loom large ahead of the Thanksgiving holiday due to restrictions on travel, with the potential for an extended build in inventories and more pain.
Gasoline demand remains well below fall 2019 levels at its lowest since June.
Most ominously, Bloomberg reports that the national inventory is at a seasonal high since 1994.
Stockpiles rose 2.2 million barrels to go over 230 million barrels — the U.S. is swimming in gasoline right now.