Having closed below $50 for the first time in 3 weeks, WTI Crude extended its losses to 3 week lows after API reported crude inventories rose by a bigger than expected 4.8mm barrels (more than double the 2mm expectation).
Crude inventories have drawn down for 6 of the last 7 weeks but rose notably this last week. Cushing inventories drewdown by the most since Feb 2014 (we suspect the spillage was the driver) and distillates inventories drew down for the 5th straight week). Gasoline inventories built notably despite expectaions of a sizable draw.
“You’ve gone from a very optimistic sentiment immediately following the Algiers announcement to a sentiment that’s more skeptical of the ability of OPEC to pull off a meaningful cut,” notes Paul Crovo, Philadelphia-based oil, equities analyst at PNC Capital.
As Bloomberg notes, the Brent Dec.-June spread at -$3.76 is steepening very quickly…
“That’s very steep and that’s telling me right now that we are well-supplied. We should expect lower prices. It’s encouraging storage,” Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors, says by phone