The oil market is feeling the downward pressure this morning as the Energy Information Administration’s weekly stats showed builds in crude, gas and distillates somewhat reinforcing data from the American Petroleum Institute late yesterday afternoon. Yesterday saw settles higher across the board as Iran, which has previously been firm in its rhetoric and actions against any production stabilization, may be willing to soften its view. Sources across the oil industry report that next month’s informal OPEC meeting in Algeria could have Iran shifting its strategy. “Iran is reaching its pre-sanction production level soon and after that it can cooperate with the others,” said one source. As always, there are some questioning such talk of curtailing output, as a similar plan in April did not take hold. “There is currently a race to print any freeze headlines but we have not yet seen strong substance behind them,” stated an energy consultant based in Switzerland.
Yesterday’s higher closes have been given back this morning as the EIA stats were more bearish than expected:
- U.S. crude stockpiles rose by 2.5 million barrels (versus an expected fall of 455,000 barrels) to a total of 523.6 million barrels in the week through April 19th as refinery inputs decreased and gasoline production fell.
- Gasoline stocks were up by 36,000 barrels (versus an expectation of a 1.2 million barrel drop).
- Distillate stockpiles rose by 122,000 barrels (versus an expectation of a 400,000 barrel increase).
As one analyst summarized, “Markets are tough here overall as there is no significant macro story, and the bears are still talking about inventories.”
All indexes (heating oil, RBOB, and WTI) are down as of this writing.