Oil prices are steady ahead of the EIA oil inventory report after a few surprises in last night’s API inventory report. The API reported a surprise draw in both gasoline (NYMEX:RBN14) and HO with a modest build in Crude oil. Cushing stocks declined by 213,000 barrels.
Evolving unrest in Iraq along with ongoing issues in Libya are once again raising a concern that oil supplies could be further interrupted. With the loss of Mosul to al-Qaeda the risk of supply issues from Iraq is starting to increase.
As expected OPEC has agreed to keep their 30 million bpd output ceiling unchanged for the rest of the year. As I have been indicating as long as the price of oil (NYMEX:CLN14) remains above the $100/bbl level and geopolitical issues prevail in several OPEC countries OPEC is not going to make any material changes to their production strategy.
A Goldman Sachs analyst jumped into the crude oil export ban discussion coming out against lifting the ban on exports. Goldman said the export ban should remain in place until a saturation point is hit when domestic refining capacity becomes insufficient to absorb increased oil production. Maintaining the statutory curb on shipments overseas will deliver the highest value to the U.S. economy according to a Goldman analyst (reported in Bloomberg).
The U.S. State Department on Friday corrected several errors it made in a key study evaluating the impact of the proposed Keystone XL pipeline, including an understatement of how many people could be killed on railroad tracks if the project were rejected and oil traffic by rail increased. The department said, however, these corrections had "no impact" on the integrity of the conclusions of the January report.
Global equities were mixed over the last twenty four hours. The EMI Global Equity Index increased by 0.15 percent with the year to date gain now at 2.9 percent. Seven of the 10 bourses in the Index remain in positive territory for the year with the ranking of the individual bourses still the same. Global equities have been a positive directional price driver for both oil and the broader commodity complex so far this week.