A more ‘normal’ day’s trading for oil on Wednesday saw gains for both US West Texas Intermediate and Brent than would normally be headline grabbers.
But after the events of Monday and Tuesday, big swings are no longer as newsworthy, especially coming from such a low base as the current prices for both crude types.
Oil prices got a boost after a tweet from President Donald Trump Wednesday raised tensions with Iran. Trump tweeted :
I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.
— Donald J. Trump (@realDonaldTrump) April 22, 2020
According to Marketwatch.com Edward Moya, senior market analyst with the Oanda trading platform reckons “oil will continue to remain heavy on demand fears and will shrug off his latest tweets about filling up the [Strategic Petroleum Reserve] without congressional approval, funding U.S. oil and gas companies, and threats to shoot down any Iranian gunboats that pose a threat.”
But Wednesday was not without drama – Brent crude futures hit an intraday low under $16 a barrel—also the lowest in 21 years, according to FactSet data.
June Brent crude futures ended up $1.04, or 5.4%, to settle at $US20.37 a barrel. At one point, the contract touched a low $15.98 a barrel in electronic trade, which would have put the contract around its lowest levels since 1999, according to FactSet data, based on the most-active contract.
The trading action comes after Brent prices on Tuesday saw their settlement since February 2002 and notched the sharpest daily slide since January 1991.
In New York June West Texas Intermediate crude rose $US2.21, or 19.1%, to settle at $US13.78 a barrel. Big rise, low base, not real news.
More newsworthy was another 12 million barrels added to US oil stocks that ended to 518.6 million barrels. The US Energy Information Administration said that was the 13th straight weekly climb and followed a record weekly increase of 19.2 million barrels a week earlier.
Oil stocks at Cushing, Oklahoma, the delivery hub for Nymex futures in New York, rose to 59.7 million barrels last week from 55 million the previous week, according to the EIA.
The record level for US stocks is 536 million barrels, which could easily be reached in the next two weeks. US analysts say American oil refineries are now operating at 12-year lows because of the slump in demand for petrol, jet fuel, diesel, and chemicals.
Imports of oil into the US are falling – currently under 5 million barrels a day (4.9 million barrels a day according to the EIA’s latest data) which is the lowest since 1992. That’s down 15% from a year ago.
The EIA said total oil products (petrol, jet fuel, etc) supplied to the US market in the past four weeks are down 25.4% from a year ago. US petrol prices are more than 30% lower than a year ago.
The EIA said US oil production is running at 12.2 million barrels a day, down 100,000 barrels in a week and steady on a year ago. That’s the first time in years current production has not been above where it was a year ago.
