Brent closed at low-$66 level despite draw on US crude stocks

By A/S Global Risk Management.

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Updated on 29 Dec 2017 12:09 GMT

Yesterday the EIA reported a draw of 4.6 mbbl of crude. But a draw of this size was likely already priced in and no immediate bullish effect was observed. Furthermore, the EIA reported a build in gasoline inventories of 0.6 mbbl and a build in distillate inventories of 1.1 mbbl. Builds in products has been the tendency for some weeks and is an effect of US refineries running high levels through all of December.

Looking to the east, demand seems strong and indicates that it is likely to continue at least in the beginning of 2018. Japan's year over year crude imports for November rose by 5.9% with some of the new barrels coming from Russia and north-western Europe. Additionally, Chinese teapot refineries have been granted larger (crude) import quotas for 2018. As an effect, the US is likely going to increase crude exports to China, and possibly the rest of Asia, as this has been the tendency through 2017.

The Libyan pipeline - which exploded earlier this week - is still disrupted and the Forties pipeline is not yet running normal levels. This is likely holding a hand under the price at the moment. The Forties pipeline is, however, expected to be fully operational at the beginning of next year.

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