Image: Global Risk Management

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Yesterday the EIA published their weekly US inventory stats, showing quite large movements. The crude inventories increased by 5 mbbl, gasoline inventories decreased by 6,3 mbbl and distillates decreased by 4,4 mbbl. This kind of pattern where crude inventories increase and products inventories decrease by quite large volumes is an indication of refineries not being able to process the crude oil produced. Typically this pattern is observed when the refinery maintenance season is ongoing, but currently there is no EIA data backing that statement.

Crude inventories in the Cushing, Oklahoma hub rose for the first time since mid-December 2017.

The increase was likely caused by a combination of record high US production and demand being very strong. Possibly this increase has spurred a contango structure in the absolute front of the WTI curve as the 2nd month future contract trades with a slight premium to the front month WTI contract.

Yesterday OPEC released the monthly oil market report. In the report OPEC increased their forecast for non-OPEC production for the 4th month in a row. Currently OPEC estimates the supply to rise by 1.66 mbpd in 2018.

Other news in the market is suggesting that the competition between the different crude grades from different locations are increasing quite heavily. If true, this is indicating a market which favours the consumer in terms of producers lowering their prices. As this is just whispers nothing is certain at all.

As the price has been quite stable during today's trade there is a possibility for more heavy volatility during the rest of the week.