WTI Holds Near 2-Month Lows AfterAPI Reports Small Crude Build, Product Draw

...distillate stocks have fallen for 5 straight weeks.

The war premium has ebbed as the belief (somewhat unexpected) that the Israel-Hamas conflicts will be contained. This brings back demand concerns amid rising rates and a slowing world economy.

The oil's decline over the last few days "continues point to expectations on the market of a localized war,"

Dan Ghali is a commodity analyst at TD Securities.

An analysis by a bank of geopolitical risks shows that premiums from wars 'tend to fade within a month of the start of the conflict.

The Middle East Front

Oil traders are "likely in efficient market mode and waiting for signs of an escalation definitive that threatens supply before driving prices higher,"

Stephen Innes, managing director at SPI Asset Management said in a market commentary.


Crude +1.35mm (+500k exp)

Cushing +375k

Gasoline -357k (-500k exp)

Distillates -2.48mm (-1.9mm exp)

API reports that crude inventories increased modestly and at Cushing Hub, stocks grew. Inventory draws were seen in products...

Source: Bloomberg

WTI hovered around $81.30 in front of the API print after erasing all the post-Israel gains, and posting its first loss monthly in five months.

After the printing, there was not much change.

In recent days there have been signs of a lackluster demand.

BP has said that the gasoline and diesel market is oversupplied, and manufacturing in China has fallen back into contraction.

In a recent note, Warren Patterson and Ewa Mannthey, commodity analysts with ING, warned that the biggest concern is the Iranian oil flow. If the U.S. tightens sanctions against the country, up to one million barrels of crude could be removed from the market each day.

In the absence of disruptions in supply from the region, a sustained and significant increase in prices is unlikely,"

The analysts at ING said.

The conflict has not yet affected the oil supply.

MarketWatch reports that the situation is still unchanged.

The situation in the Middle East has a fluid nature.

Bloomberg reported late on Monday that Saudi Arabia's army is on high alert following deadly clashes between Yemen's Iran supported Houthi rebels and those who tried to fire a rocket over Saudi Arabia towards Israel.

Macquarie strategists wrote in a note published recently that they are still bearish on the oil market, but

"Recognize the downside risks associated with Middle East conflict."