PVM Midday Report 13 June 2016
Headlines
OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
Iran’s biggest oil…
Crude prices dipped again yesterday despite the EIA reporting a much bigger crude draw than expected at -4.4 million bbls and much higher than the -2.4 million bbls reported by the API. Prices initially rallied after the release of the figures but sellers saw it as an opportunity to sell with WTI closing down 59 cts/bbl at $45.15 and Brent losing 40 cts/bbl to close at $49.59.
When large crude draws nationally and draws at Cushing (-540,000 bbls) cannot produce anything more than a fleeting price rebound it is a bad sign. Red lights are warning of a move down to the year’s lows and there is no obvious reason why it should stop there. On the positive side for WTI there is not an overhang of speculative length to be dumped, but that is not the case with Brent.
US refinery run rates rose to an astonishing 96.1% nationally with PADD2 at 100%. Gasoline built by 800,000 bbls and distillate by 700,000 bbls. Total commercial stocks fell by a marginal 270,000 bbls. US domestic crude production came in at 9.47 mbpd with the four-week average at 9.5 mbpd. US crude stocks are +24.5% on last year, distillate +15.9%, gasoline +1.3% and total commercial +13.7%.
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