Oil prices eked out gains today (4th straight day higher) with WTI back above $75 as fears of a hawkish Powell speech passed painlessly (despite some hawkish FedSpeak from his underlings) and a flat dollar didn't impact direction.
“Technically, the energy complex remains stuck in neutral, with a wide range for prices to swing inside of without creating a new trend,” analysts at wholesale-fuel distributor TACenergy wrote in a note to clients.
“Fundamentally, the case for prices bottoming is getting stronger as lingering supply issues coincide with demand picking up both domestically and abroad.”
Will the inventory/supply/demand data offer any more clues for the start of the new year...
API
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Crude +14.865mm (-2.375mm exp) - biggest build since Feb 2021
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Cushing +2.3mm
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Gasoline +1.8mm (+1.3mm exp)
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Distillates +1.1mm (+500k exp)
We suspect the massive 14.865mm barrel crude inventory build (the largest since Feb 2021) is likely driven by the deep freeze shutting in a number of refiners...
Source: Bloomberg
WTI was fading back below $75 ahead of the API data and accelerated lower on the huge build print...
Expectations for higher demand out of China as the country scraps its COVID-19 restrictions continue to provide some support for prices.
"We are confident that oil prices will climb again once the current wave of COVID infections has peaked in China and economic activity picks up," said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
Still, Stephen Innes, managing partner at SPI Asset Management, warned that oil traders are "unlikely to see the explosive economic reopening that oil bulls had hoped for, with the market ignoring case counts in favor of local Chinese activity data."
Oil prices "should rise tangentially to the increasing mainland mobility pulse," he said in a market update.
