A plethora of factors contributed to crude moving up this week, with the EIA scaling back its US output estimate (cooling the bullish sentiment a bit), Saudi Aramco restating its firm commitment to keep the production curtailments as deep as the market conditions require, and most of all, the Venezuelan blackout blocked the exports capabilities of already sanctions-stricken PDVSA.
Tuesday’s trading environment was further buoyed by the American Petroleum Institute announcing a largely unexpected crude stock drop.
All in all, global benchmark Brent traded at around 67.3-67.5 USD per barrel on Wednesday afternoon, while WTI was drawing increasingly closer to 58 USD per barrel, having demonstrated an almost 2-percent growth on Wednesday. Should the current growth trend continue, both benchmarks would beat 4-month highs by the end of the week.
1. US Crude Inventories Bounce Back
- US commercial crude stocks rebounded robustly during the week ended March 01, increasing by 7.1 MMbbl to 452.9MMBbl.
- The inventory buildup was accompanied by a palpable decline in crude exports, by 0.6mbpd to 2.8mbpd, and an even more sizeable increase in crude imports to 7.0mbpd, up 1.1mbpd week-on-week.
- Refinery utilization seems to be edging higher for once, increasing 0.4 percent to 87.5 percent, with refinery input volumes higher by 0.1mbpd (at 16mbpd).
- Amid gasoline prices rising for the fifth consecutive week, gasoline stocks have decreased by 4.2MMbbl to 250.7MMbbl, edging closer to the statistical five-year range.
- Distillate inventories have dropped 2.4 MMbbl week-on-week to 136 MMbbl, marking a fourth consecutive, albeit relatively small, decline from January’s 143MMbbl peak.
- Early crude stock estimates for the week ending March 08 diverged with API predicting a 2.6 MMbbl drop, while the Platts analyst survey predicts a 3.3MMbbl build.
2. Iranian Discounts to Saudi Reach 20-Year Lows
- Iranian national oil company NIOC has hiked its April-loading official selling prices for Asia Pacific cargoes by 30 and 35 cents per barrels for Iranian Heavy and Iranian Light, respectively.
- This marks the largest gap between Iranian Light and Saudi rival grade Arab Light in 20 years, with Iranian Light now trading at a 0.45 USD per barrel discount even though traditionally it had been marketed at a premium to the Saudi crude.
- Similarly, Iranian Heavy…