Daily Market Briefing
Since about start January to mid-February the Brent crude has traded in a narrow range. Then on February 12 the price started a steep uptrend reaching $67.38 the on Feb. 20 – the highest recorded in 2019. Likely the uptrend comes as an effect of several longer-term effects - The OPEC+ cut reaching decent compliance which was reported at 83% by the OPEC Joint Technical Committee. Russia’s compliance reached 18%.
Furthermore, the U.S. sanctions against Venezuela have resulted in several U.S. refiners searching for heavy crude elsewhere. Consequently, the price of heavy crude has increased remarkably as the supplied amount is decreasing – Venezuela is a large supplier of heavy crude oil. In addition, the sanctions entail scarce refined product availability in Venezuela and premiums for Venezuela importing refined products are high.
The stock markets’ uptrend might as well have spilled over to the crude market as the sentiment towards the U.S.-China trade war and a potential prolonging of the truce seems more likely which is a bullish indication. Officials from the two countries held high level meetings yesterday and will continue today – aiming for some kind of agreement before March 1.
Yesterday’s weekly oil inventory report from the Energy Information Administration (EIA) showed a larger than expected build in crude oil stocks of 3.6 mio. barrels while gasoline and distillates both fell by around 1.5 mio. barrels. Total crude oil inventories are now around 454.5 mio. barrels which is the highest since October 2017. Exports reached a record of 3.6 mio. barrels per day.
Turning to the economic data side, today sees a row of European CPIs and business environment expectations.