Crude: Crazy contradictions
Yet the differences in the API and EIA raises more questions than answers. While crude supply has fallen over the last few weeks, products have risen. The glut of oil is easing but with a glut of product, will we see demand pick-up. Bottom line is, I believe that we will see upward demand revisions in the coming weeks. As for oil, we should soon be bottoming for a rebound. The trade and computer algos or algorithm have been focused on technical and we are close to this oversold market getting ready to turn. We may see some weakness but like in early May when we saw a similar sharp break, it was a buying opportunity for a decent snap back.
On top of that, the geopolitical risks are rising. Iran is trying to place some blame on Saudi Arabia for the ISIS attack in their capital. Fox News reports that “An attacker threw an explosive device over the fence of the U.S. Embassy in Kiev that detonated in the early hours on Thursday, Reuters reported. There were no injuries, according to the report. Authorities called the incident a terrorist act. Authorities in Kiev said in a statement that the incident occurred at 12:05 a.m. local time, and occurred at the U.S. Embassy compound in the Shevchenko district. "It was determined that an unknown assailant threw an unidentified explosive device onto the grounds of the diplomatic mission. Criminal proceedings have been initiated under Art. 258 (Terrorist Act) of the Criminal Code of Ukraine," the statement read, according to The Mirror. The U.S. Department of State issued a travel warning in 2016 for U.S. citizens in Ukraine. The statement read, “The situation in Ukraine is unpredictable and could change quickly.”
Crude oil and natural gas moves could change quickly as well. The EIA releases its natural gas report and the expectation is for a 98 bcf increase. This might be the biggest injection this summer. Cool temperatures last week may be offset by expectations of warmer temps this week and month.