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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

[Jessica Summers, Bloomberg]

Crude retreated from an early rally amid signs of swelling stockpiles at the most important U.S. storage complex.

 Futures were up 0.4 percent in New York on Thursday. Data-provider Genscape Inc. was said to report inventories at the key pipeline hub in Cushing, Oklahoma, expanded, taking the wind out of a rally earlier in the session driven by an unexpected price increase by Saudi Arabia, the world’s biggest oil exporter.
The Saudi increase means “they must be feeling pretty confident about the demand situation, but the Cushing build did offset some of that enthusiasm,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. “Cushing has built pretty sizeably the last couple of weeks.”

The Saudi price markups suggest OPEC’s dominant producer has no plans to wind down production caps that rescued the global crude market from the worst downturn in a generation.

 “The general feeling was that they were going to lower prices,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “A lot of people were looking at it like, if you were going to lower the pricing mechanisms, then maybe that would be indicative of them possibly loosening the production-cut regime.”

West Texas Intermediate for May delivery rose 9 cents to $63.46 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Total volume traded Thursday was about 6 percent above the 100-day average.

Oil prices have also seesawed with equity markets amid brewing concerns about a trade war between the U.S. and China that would clip economic growth and energy demand. On Thursday, the S&P 500 Index climbed as representatives from the U.S. and China left the door open to defusing tensions through negotiations.

Although OPEC-led output limits have eroded a worldwide glut that collapsed prices, U.S. drillers have been steadily raising production to unprecedented levels. An Energy Information Administration report released Wednesday showed U.S. crude stockpiles fell by 4.62 million barrels last week, the biggest draw since January, while crude exports jumped to a record.

https://www.bloomberg.com/news/articles/2018-04-05/oil-gains-as-surprise-stockpile-drop-adds-to-easing-trade-fears

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