Breaking a four-day downward trend, U.S. futures closed up yesterday, +$0.57 on WTI. Brent has failed to close above $50/barrel Monday or Tuesday this week, while WTI has been hovering around the $45/barrel mark for a while now.
Last night, the API weekly figures showed there was a draw in crude by 2.4 million barrels, with only 504,000 barrels coming from Cushing. The API reported that gasoline had a draw of one million barrels, while on the other hand, there was a build of 1.7 million barrels on distillates.
However, the DOE stats, as of this morning, showed that there was actually a draw of 4.4 million barrels for crude. The stats also showed that there was a build of 811,000 barrels in gasoline, and as for distillates, a build of only 709,000 barrels; rather than the 1.7 million barrels API reported.
In current energy news, the U.S. House of Representatives will need a two-thirds vote to override President Obama’s nuclear agreement between Iran and the six world powers. If passed, this agreement could result in an extra 500,000 bbl/day of crude to enter into a world market that is already oversupplied. Coupled with OPEC’s decision to ramp up production, we are left with the question of how low will oil prices fall? Is $40 a barrel in the realm of possibilities? $30 a barrel? $20? Or will U.S production significantly slow down in the upcoming months to remedy this current state of oversupply? We shall see.