US crude oil inventories recorded a surprisingly sharp decline of 11.5 million barrels last week, Commerzbank’s commodity analyst Carsten Fritsch notes.
WTI price is catching up with the price of Brent oil
“This was the largest weekly drop in inventories in almost a year. The drawdown was fuelled by a significant drop in net imports of 1.8 million barrels per day, as imports fell and exports rose. The latter is remarkable because the price discount of WTI against Brent has narrowed noticeably recently, meaning that US light oil has become less competitive in terms of price.”
“At the beginning of the week, the difference was only $2.5 per barrel, the lowest level this year. It is therefore questionable whether exports will be able to maintain their high level. The reduction in inventories is therefore also likely to be partially reversed.”
“US crude oil inventories are currently 10% below the 5-year average, which indicates a tight supply situation in the USA. In Cushing, the delivery point for WTI, the deviation is as high as 40%, which means that the WTI price is catching up with the price of Brent oil.”
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