WTI ‘Steady’ At 2-Month-Lows After Big Crude Draw, No SPR Addition

Oil prices in New York steadied this morning after starting the session at its lowest opening price in two months as a souring economic outlook threatened prospects for energy demand and spurred investors to shun riskier assets.

A poor reading of US consumer confidence fanned concerns over the impact of President Donald Trump’s tariffs. Plans for Ukrainian President Volodymyr Zelenskiy to meet with Trump in Washington raised the prospect that Moscow’s crude may again flow freely in the near future.

“Trump actions are hurting consumer and business confidence, which again will weaken actual consumption,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.

Crude has lost almost 5% this month as Trump’s aggressive moves on trade stoked investor anxiety at a time when oil traders were already concerned about lackluster consumption in China. Supply issues have also been at the fore, including the possibility of a restart of significant pipeline flows from Iraq’s semi-autonomous Kurdistan region, with the US pushing for a resumption.

In the US, there was a mixed report from the industry-funded API on commercial inventories. While nationwide stockpiles decreased by 600,000 barrels last week, levels at the key storage hub in Cushing, Oklahoma, were seen rising by a substantial 1.2 million barrels. The government’s numbers will be the deciding factor for the day…

API

• Crude -640k

• Cushing +1.2mm

• Gasoline +537k

• Distillates -1.1mm

DOE

• Crude -2.33mm

• Cushing +1.28mm

• Gasoline +369k

• Distillates +3.91mm

Crude stocks declined for the first time in five weeks but distillates inventories built significantly. Stocks at the all-important Cushing Hib rose for the 3rd week in a row to their highest since mid-November…

Source: Bloomberg

The Trump administration added no crude the SPR for the second straight week, leaving the total crude stock draw the largest since Dec 20th…

Source: Bloomberg

US Crude production was marginally higher at record highs…

Source: Bloomberg

WTI was steady around $69 before and after the official data print…

Source: Bloomberg

The uncertainties over tariffs have eclipsed the lift from fresh sanctions against Iranian flows, as well as expectations that OPEC+ will once again defer a plan to progressively raise output, currently slated to start in April.

“Tariffs and counter-tariffs have the potential to weigh on the oil-intensive part of the economy, which creates uncertainty over demand,” Morgan Stanley analysts including Martijn Rats said in a note. 

“We expect OPEC to extend its current quota beyond April, likely keeping production broadly stable.”