20 Feb 2015
EIA fails to match API’s high oil inventory numbers, but overall tone intact - KBC
FXStreet (Barcelona) - The KBC Bank Team comments on the Energy Information Agency’s oil inventory data release and its impact on the market.
Key Quotes
“Although yesterday’s Energy Information Agency (EIA) data did not confirm Wednesday’s report from the American Petroleum Institute as far as the volume of increase in crude oil inventories is concerned (the API report had foreseen more than 14 million barrels build in inventories which, if it had been confirmed, would have marked an all-time high), it left the overall message intact.”
“The data showed about twice as large build in stocks than the one that had been anticipated by analysts at the beginning of this week.”
“The oil price therefore fell by about 0.5% yesterday while the US benchmark WTI even lost about 1.9% as inventories in Cushing, the delivery location of NYMEX WTI futures contract, rose by about 3.6 million barrels.”
“Rising stocks in Cushing suggest that traders have recently been taking advantage of relatively wide contango in the front-end of oil forward curve.”
“All in all, recent EIA data reminded us that although the supply elasticity of “shale oil” likely is much higher than that of “conventional oil”, it will take some time before the impact of lower oil prices on the US supply is more pronounced. For example, the data showed that US domestic crude oil production increased by more than 800 thousand barrels per day visà- vis June 2014. Let us recall that in the meantime, the oil price fell by about one half…”
Key Quotes
“Although yesterday’s Energy Information Agency (EIA) data did not confirm Wednesday’s report from the American Petroleum Institute as far as the volume of increase in crude oil inventories is concerned (the API report had foreseen more than 14 million barrels build in inventories which, if it had been confirmed, would have marked an all-time high), it left the overall message intact.”
“The data showed about twice as large build in stocks than the one that had been anticipated by analysts at the beginning of this week.”
“The oil price therefore fell by about 0.5% yesterday while the US benchmark WTI even lost about 1.9% as inventories in Cushing, the delivery location of NYMEX WTI futures contract, rose by about 3.6 million barrels.”
“Rising stocks in Cushing suggest that traders have recently been taking advantage of relatively wide contango in the front-end of oil forward curve.”
“All in all, recent EIA data reminded us that although the supply elasticity of “shale oil” likely is much higher than that of “conventional oil”, it will take some time before the impact of lower oil prices on the US supply is more pronounced. For example, the data showed that US domestic crude oil production increased by more than 800 thousand barrels per day visà- vis June 2014. Let us recall that in the meantime, the oil price fell by about one half…”