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Oil likes what it heard from OPEC, prices edge higher early

  
Analysis, Crude
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Crude starts the week higher

Crude starts the week higher
WTI crude rose as high as $39.90 shortly after the open. It’s since ticked a few cents lower to $39.83, which is up 25-cents on the day.
OPEC+ announced a one-month cut extension on the weekend but it wasn’t all good news as some Libyan production came back online.
Keep a close eye on the $40 with crude in the March gap. The bottom end of it is $41.05.

OPEC+ agrees to 1 month output cut extension

  
Analysis, Crude

PEC+ endorses one-month extension

OPEC+ endorses one-month extension
OPEC+ agreed today to extend record oil production until the end of July.
Iraq had been holding up the deal but agreed to make up for overproduction in the previous period. Nigeria agreed to a similar proposal.
The agreement takes 9.6 mbpd of production off line in July, which is slightly less than in June because Mexico will no longer participate.
The agreement includes a stipulation that any country that doesn’t meet its full quota must make it up through September.
The announcement was largely priced in late on Friday and WTI crude finished at $39.55.

DOE crude oil inventories -2077K vs 3000K estimate

  
Analysis, Crude

The weekly Department of Energy inventory data

  • crude oil inventories -2077K vs. +300K estimate
  • gasoline inventories 2795K vs 300K estimate
  • distillates inventories 9934K vs 2900K estimate
  • Cushing OK inventories -1739K vs -3395K last month
  • US refinery utilization 0.50% vs 0.90% estimate
  • crude oil implied demand 17676 vs 17467 last week
  • gasoline implied demand 7811.0 vs 7463.9 last week
  • distillates implied demand 3457.9 vs 4150 last week.
The private data yesterday showed:
  • crude oil -483K
  • Gasoline +1706K
  • Distilates +5917K
  • Cushing -2200K
Crude oil July futures were trading at $36.75 just prior to the report. The price is currently trading at $36.67

Russia reportedly still hasn’t decided on its position on OPEC+ cuts

  
Analysis, Crude

A decision on that is expected some time today

Bloomberg with the headlines here, adding that there is some support in Russia for extending  the current output cuts. Again, as a reminder that the agreement for the output cuts deal is only for the months of May and June.

As such, OPEC+ is looking to get a meeting together to extend that in order to maintain stability in the oil market. But as the reopening of economies gather pace, it will be a real test of resolve/compliance in enforcing any extension of the deal in the coming months.

EIA weekly US oil inventories +7928K vs -1911K expected

  
Analysis, Crude
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Weekly petroleum inventories:

  • Prior was -4982K
  • Gasoline -724K vs +150K expected
  • Distillates +5495K vs +2500K expected
  • Cushing -3395K vs -5587K prior
That’s a big build but it was largely foreshadowed by the API report late yesterday. Oil is under some modest pressure and down 37-cents on the day to $32.44.
API numbers from late yesterday:
  • Crude +8731K
  • Cushing -3370K
  • Gasoline +1120K
  • Distillates +6907K

Private survey data shows a surprise large build in headline crude oil inventory

  
Analysis, Crude

This inventory report is released to subscribers and hit’s media in the moments following.

  • Official US govmt survey data is due tomorrow morning US time.
  • Both are a day alter than usual due to the US holiday on Monday (May 25).
Oil price dipping on the data release to a fresh low ion the session. A draw was expected, for the 3rd week in a row. Nope.
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