WTI oil up 1.87% on June 7
Posted: Thu Jun 07, 2018 5:06 pm
West Texas Intermediate (WTI) touch $66.00/bbl on Thursday and closed at $65.94, up 1.87% for the day.
There was negative reaction to the EIA report yesterday, but the Bulls took a harder look at the report and bid up oil on Thursday:
> Refinery utilization jumped to 95.4% last week and if it stays that high, crude oil inventories will be drawn down.
> There is clearly high demand for refined products and the U.S. economy is clicking on all cylinders.
> Yes, gasoline inventories increase, but they definitely need to be high this time of year. The report was as of June 1, the first day of the peak demand period for gasoline.
> Brent closed at $77.32/bbl. The HUGE spread between WTI and Brent will make it profitable to ship Permian crude oil to the coast and export it. Higher exports of crude will put more pressure on oil inventories.
> Days of supply are all low:
Crude oil = 25.8 days of supply (down 0.2 from last week's report)
Gasoline = 25.2 days
Jet Fuel = 23.4 days
Distillates = 29.8 days
The bullish natural gas storage report may have had a minor impact, just because it shows strong industrial demand for gas.
MY TAKE: It is important that support at $65 held for WTI. Big premium for Brent is "mind boggling". Venezuela has real problems and traders know it. OPEC increasing production later this year is already baked in and everyone knows we will need every drop of it. One more "unplanned supply outage" and WTI will easily move over Raymond James Q3 estimate of $70/bbl.
There was negative reaction to the EIA report yesterday, but the Bulls took a harder look at the report and bid up oil on Thursday:
> Refinery utilization jumped to 95.4% last week and if it stays that high, crude oil inventories will be drawn down.
> There is clearly high demand for refined products and the U.S. economy is clicking on all cylinders.
> Yes, gasoline inventories increase, but they definitely need to be high this time of year. The report was as of June 1, the first day of the peak demand period for gasoline.
> Brent closed at $77.32/bbl. The HUGE spread between WTI and Brent will make it profitable to ship Permian crude oil to the coast and export it. Higher exports of crude will put more pressure on oil inventories.
> Days of supply are all low:
Crude oil = 25.8 days of supply (down 0.2 from last week's report)
Gasoline = 25.2 days
Jet Fuel = 23.4 days
Distillates = 29.8 days
The bullish natural gas storage report may have had a minor impact, just because it shows strong industrial demand for gas.
MY TAKE: It is important that support at $65 held for WTI. Big premium for Brent is "mind boggling". Venezuela has real problems and traders know it. OPEC increasing production later this year is already baked in and everyone knows we will need every drop of it. One more "unplanned supply outage" and WTI will easily move over Raymond James Q3 estimate of $70/bbl.