Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Oil Flat As Huge Increase in Supplies Surprises Markets

April 24, 2019 at 15:15 by Andrew Moran

Crude oil is trading relatively sideways midweek after the US government reported a much larger-than-expected increase in domestic stockpiles. Oil prices are also pulling back from their six-month highs on reports that several Organization of the Petroleum Exporting Countries (OPEC) members will ensure adequate crude production to offset Iran’s losses.

June West Texas Intermediate (WTI) crude oil futures dipped $0.10, or 0.15%, to $66.20 per barrel at 14:44 GMT on Wednesday on the New York Mercantile Exchange. Crude prices are trading at six-month highs as WTI futures have surged nearly 40% year-to-date.

Brent, the international benchmark for oil prices, is in the green in the middle of the trading week. June Brent crude futures tacked on $0.17, or 0.23%, to $74.68 a barrel on London’s ICE Futures exchange. Brent is also up close to 40% so far this year.

According to the US Energy Information Administration (EIA), domestic supplies of oil climbed by 5.5 million barrels for the week ending April 19. This is dramatically higher than the market forecast of a decline of 500,000 barrels. The US government also reported that gasoline stockpiles slipped 2.1 million barrels, while distillate inventories dropped 700,000 barrels.

The US Baker Hughes total oil rig count was 825, down from 833 in the previous week.

This week, the US government announced that it would end Iran sanction waivers that prevent the oil-rich country from trading its energy source with other markets. Washington will end all waivers beginning May 2 and any nation that trades with Tehran will also face sanctions from the US. Some countries have pushed back, including China, which has filed a formal complaint with the US government.

There is further speculation that Venezuela could soon face additional sanctions.

Experts contend that this move could prompt OPEC to end its output-cut agreement. Under the arrangement, OPEC and its allies agreed to slash production by 1.2 million barrels per day (bpd). It was set to expire in June, but there had been many reports that OPEC was going to extend it until the end of the year to help stabilize prices.

For now, according to the International Energy Agency (IEA), global markets are “adequately supplied” and that “global spare production capacity remains at comfortable levels.” OPEC’s spare capacity, for example, recently reached 3.3 million bpd.

In other energy commodities, June natural gas futures rose $0.005, or 0.2%, to $2.50 per million British thermal units (btu). June gasoline futures fell $0.015, or 0.75%, to $2.06 a gallon. June heating oil futures dipped $0.01, or 0.5%, to $2.11 per gallon.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply