Oil patch: crude prices falling after the Federal Reserve’s comments and inventory build

Benchmark West Texas Intermediate (WTI) crude oil price traded down to $76.6 per barrel this week and seem to be stuck in a $70-$80 range this year. Traders grew cautious yesterday after Jerome Powell’s testimony in Congress triggered a selloff in energy futures.

Inventories building, demand slowing

Commercial crude inventories been building for the past 11 straight weeks, ahead of the typical seasonal pattern, up by 62 million barrels since mid-December
Today’s Department of Energy’s Petroleum Report saw petroleum product inventories building against the seasonal trend
Overall, petroleum product inventories increased by 2 million barrels, and are 2% above the 5-year seasonal average
Implied oil demand fell by 1.4 million barrels per day, with gasoline and diesel demand dropping by 0.5 million and 0.3 million barrels per day respectively
Crude oil inventories saw a 1.7 million barrels drawdown, even though exports dropped by 2.3 million barrels per day
Gasoline inventories were down by 1.13 million barrels,some 4% below the 5-year seasonal average
Diesel inventories were up slightly, even with exports increasing for the week
Diesel imports weaker
European diesel imports were significantly down, by 270 million barrels, compared to a large amount of pre-buying ahead of sanctions on Russian diesel
The region will continue to ramp up distillate imports from the Middle East and Asia to fill the gap left by Russian diesel
In Europe, there has been a drop diesel and gasoil inventories in the so-called ARA storage hub (Amsterdam-Rotterdam-Antwerp)
Europe needs to ramp up distillate imports from the Middle East and Asia to fill the gap left by Russian diesel

Keystone pipeline

The US Pipeline and Hazardous Materials Safety Administration (PHMSA) ordered TC Energy to reduce operating pressure on more than 1,000 additional miles of the strategically important Keystone pipeline
TC Energy claimed that technical factors in pipeline construction including bending stress and a weld flaw might have been the cause of a spill which is expected to cost around $480 million

Oil market analysis by Alex Hodes

Contact: Alex.Hodes@StoneX.com

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.