Oil prices slipped lower today after the Biden admin announced it plans to allow Chevron to negotiate its oil license with Venezuela’s national producer and legged down further on growth scares as Fed Chair Powell said he won’t hesitate to raise rates above neutral if needed.
The proposed changes to alleviate some sanctions against Venezuela “should be seen as positive development, but not be mistaken as providing immediate relief to the tight market we are experiencing in real time,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.
Crude -2.445mm (+1.553mm exp)
Cushing -3.071mm – biggest draw since Oct 2021
Gasoline -5.102mm – biggest draw since Oct 2021
Large draws for Crude and Gasoline stocks
“We are getting into uncharted territory of crude inventories,” said Peter McNally, global sector lead at Third Bridge.
“It’s tricky to implement these bans at a time when demand normally picks up and inventories are low.”
WTI hovered around $112 ahead of the API data and rallied on the surprise draws…
Finally we note that WTI settled above Brent (front-month) for the first time since May 2020…
Also, US average retail gasoline prices topped $4.50 a gallon for the first time, according to auto club AAA, just a couple of weeks ahead of the summer driving season…
And judging by where crude and wholesale gasoline prices are, we could see $5 within days.
And all this as the SPR hits its lowest level since 1987…
Dear Mr. Biden, it’s not working.