Oil’s 3-Day Run-Up Snaps On Mixed Inventories, Covid Fears

Friday,   13-Nov-2020   09:03 AM (IST)

Crude prices snapped a three-day run-up after mixed inventory numbers and a new explosion of coronavirus cases in the United States muddied the outlook for oil. New York-traded West Texas Intermediate, the leading indicator for U.S. crude, settled down 33 cents, or 0.8%, at $41.12 per barrel. WTI had risen a cumulative 10.4% over three previous sessions. London-traded Brent, the global benchmark for crude, finished down 27 cents, or 0.6%, at $43.53. Oil prices slid after the U.S. Energy Information Administration reported that crude oil inventories across the country rose 4.3 million barrels last week, versus expectations for a draw of 913,000 barrels.  The build even contradicted the industry's own calculation of a drawdown of more than 5 million barrels last week, according to the American Petroleum Institute. Crude stored at the Cushing, Oklahoma delivery point for contracted barrels of WTI declined 518,000 barrels last week, against expectations for a draw of 1.6 million barrels. But offsetting the crude numbers were fuel statistics which indicated better demand. Gasoline stockpiles fell by 2 million barrels above forecast. Diesel-led distillate inventories slid 3.5 million barrels more than thought. Those fuel numbers, and recent OPEC rumblings about staying the course with production cuts, helped limit the downside in crude prices despite a rather ominous forecast on energy by the Paris-based International Energy Agency as Covid-19 cases set on a new rampage. U.S. coronavirus cases hit a new daily record high on Wednesday, with 140,543 reported, marking the ninth straight day where they stood at above 100,000. According to Johns Hopkins University, some 10.4 million Americans have contracted the Covid-19 so far and nearly 242,000 have died from complications caused by the virus. The trend divergence between crude and fuels was probably due to industry disruptions caused by the end-October Storm Zeta, analysts said. A record of nearly 30 hurricanes have occurred in the U.S. Atlantic region this year, affecting crude production in states like Louisiana and the broader Gulf Coast of Mexico. Each of these storms resulted in near total shutdowns of crude production that invariably sprung back quickly, forcing estimators to sharply pare crude inventory/fuel demand estimates at first, only to ratchet them much higher later.