On Wednesday evening, the two oils continued to move higher after the release of EIA inventory data. The most active NYMEX WTI crude oil main futures contract traded 5,631 lots instantly within one minute of buying and selling at 22:30 Beijing time on April 14, with a total value of $349 million in trading contracts. As of 22:41, both oils rose to 4%.
The EIA report released at 22:30 showed that commercial crude oil inventories excluding strategic reserves decreased by 5.89 million barrels to 492.4 million barrels, down 1.2%, a much larger than expected drop and the largest since the week of February 12. This was interpreted as a positive signal, the U.S. and cloth oil both higher, at the same time, the U.S. oil and gas sector strength, Exxon Mobil Oil, Royal Dutch Shell, BP rose more than 2%.
As for other data in the EIA report, US domestic crude oil production increased by 100,000 barrels to 11 million barrels per day last week; commercial crude oil imports, excluding strategic reserves, were 5.852 million barrels per day last week, down 412,000 barrels per day from the previous week; crude oil exports decreased by 855,000 barrels per day to 2.579 million barrels per day last week.
Financial blog Zero Hedge commented on EIA crude oil inventories, saying analysts accurately expected crude oil inventories to decline for a third consecutive week and that the decline in EIA crude oil inventories was more than that reported by API. In addition, gasoline inventories rose much less than the API report. Stephen Brennock, an analyst at PVM Oil Associates, said the combination of unprecedented fiscal stimulus and vaccination actions will provide a solid foundation for a recovery in oil demand in the second half of this year.
Earlier today, the IEA also raised its oil demand forecast in its latest monthly report, saying that oil market fundamentals look significantly stronger and that the large accumulation of global oil stocks affected by last year’s outbreak is being absorbed as vaccinations are accelerating and the global economy is on a better footing.
Several institutions are now optimistic about the oil market outlook.
OCBC strategists said the U.S. appears to have finally ended its first quarter cold snap, with refinery utilization reaching 84 percent, the highest level in more than a year. This will help reduce crude oil inventories more quickly and also means that the pace of gasoline inventory reduction will be a major determinant of oil prices in the near term.
In addition, the recovery of viruses globally, first in Europe and now in Asian economies such as India and South Korea, means that the upward bull market may be derailed for the time being. OCBC Bank believes its long-term bias remains bullish.
Capitol Macro, on the other hand, expects supply to remain constrained and demand to continue to recover, which will push oil prices higher in the coming quarters. The U.S. is easing restrictions that will increase gasoline and jet fuel consumption. Meanwhile, global industrial activity has now generally recovered from last year’s recession and no longer poses a significant headwind. Despite OPEC+’s decision to ease production cuts, market supply is expected to really rebound in May. Elsewhere, however, output is expected to remain constrained. In the US in particular, weak drilling activity suggests a slow rebound in production.
Capitol Macro expects the global oil market to remain in deficit for the remainder of 2021, but this deficit may be smaller than previously expected, lowering its Brent crude oil price forecast to $70/bbl and $75/bbl for the second and third quarters, respectively.
Forexlive analyst Adam said that WTI crude oil prices broke out of the late-March price range after EIA crude oil inventory data showed tighter inventories. $62.27 is the key level, which was the high at the end of March, and a break above that high could signal the end of the past three-week consolidation period.
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