API reports surprise build while market awaits EIA report

Oil benchmarks are moving higher with pace as supply/demand fundamentals are catching up amid geopolitical uncertainties surrounding Venezuela, and Iran. The recent recovery in Chinese and The United States’ economic numbers, namely the PMI report has energized the oil bulls.

Key factors at play in the crude oil market –

• OPEC and non-OPEC members decided to cut oil output by 1.2 million barrels per day, where OPEC would bear 0.8 million supply cut, and the rest would be borne by the Russia-led non-OPEC. According to OPEC’s monthly oil report, the supply dwindled by almost 0.8 million barrels in January, and OPEC as a whole is almost 80 percent compliance with the new agreement. In February the production has declined further by almost 220,000 barrels per day as OPEC reaches 93 percent compliance. According to Reuters’ survey, OPEC production is set to decline by another 0.28 million barrels in March, pushing compliance to 135 percent.
   
• With oil price moving significantly higher, President Trump’s twitter attack on OPEC and higher oil price could land anytime.
   
• Iran and the United States remain at loggerheads over the former’s nuclear ambition.  
   
• The crisis continues in Venezuela as oil production set to decline below 1 million barrels in March.
   
• U.S.  Crude oil production has reached a record high of 12.1 million barrels, well before EIA’s own projection.
   
• Oil future curve is gradually shifting from Backwardation to Contango, which could be a sign that the current bull run might be coming to an and.
   
• API reported a build of 3 million barrels of crude oil. Gasoline saw a draw of 1.54 million barrels.

Key global oil benchmarks:

• WTI - $62.5/barrel
• Brent - $69.6/barrel
• OPEC basket - $68.8 /barrel
• Urals - $69.6/barrel
• Oman - $68.3/barrel
• Dubai - $67.8/barrel
• Western Canada Select - $45/barrel

Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT.