This morning when I came into the office it looked like the oil market might continue climbing, but this was short-lived. As of 9:50 a.m., the market is down, with refined products down around 1 cent and WTI crude sitting slightly above $46 per barrel.
According to Reuters, it’s imperative that global crude inventories show a significant decrease on this week’s inventory reports. Why you ask? The market needs to see some concrete proof that production cuts are actually helping balance out the overflow in the market.
Last week’s API statistics called for a big draw on crude, but when the DOE numbers came out, many were shocked to learn that crude decreased much less than anticipated. In turn, this was not helpful for keeping the bears away.
In my mind, it may be tough for the bulls to get any momentum without bullish inventory data to back them up. With U.S. production on the rise, the world’s producers are probably crossing their fingers in hopes of some bullish reports today and tomorrow. "We really need to see some of the data starting to support the idea that global inventory levels are coming down," Saxo Bank senior manager Ole Hansen said.
Saudi Arabia commented that it would do “whatever it takes” to help clear the glut that has persisted over the last two years. This is supported by Saudi Aramco’s announcement that it is cutting its June allocation to Asia by 6 million barrels.