Daily Market Briefing
After a sharp drop earlier this week, oil prices trend back upwards. During yesterday’s trading the Brent crude price reached for higher levels during most of the day, but as the inventory numbers were released Brent allegedly found the incentive to approach last week’s price level. Crude oil inventory data from the Energy Information Administration (EIA) showed a huge drop of 8.65 mbbl in U.S. crude oil storages which made oil prices increase immediately. It was the biggest decline since July last year. Consensus was a build of around 2.8 mio. barrels. The EIA report furthermore showed a modest draw on gasoline of 0.3 mbbl and a draw on distillates of 1.91 mbbl and continued increase in U.S. oil production to 12.1 mio. barrels per day. . U.S. crude oil imports fell by 1.36 mio. barrels last week which is 2 decade-low.
The large unexpected draw on the US stocks yesterday could be caused by the OPEC+ cuts starting to take effect and possibly as well a sign that the US is having a difficult time in finding heavy crude oil for their refineries as Venezuelan oil is sanctioned away
Earlier this week the U.S. president commented on oil prices, stating that OPEC should take it easy with regards to their cuts as the “oil price is getting too high”. Wednesday, the Saudi energy minister Khalid Al-Falih said that OPEC and its partners are taking it easy and that the approach is “very slow” and “measured”.
Weighing on financial markets – potentially spilling over to the oil market – is news of overnight Chinese manufacturing activity data for February disappointing. Manufacturing PMI came at 49.2 versus previous reading of 49.5. Friday, another manufacturing activity reading is published.