Oil: Hopes of further inventory withdrawals keep positive mood – ANZ
|Brent crude oil fell to a low of $42.46/bbl before recovering to above $43/bbl as the rally runs on thin ice amid resurgence of COVID-19 cases, strategists at ANZ Bank apprise.
Key quotes
“Expectations of further inventory withdrawal kept market sentiment positive. Investors are reassessing the fundamental drivers behind the price rally as the demand backdrop looks uncertain and inventories are still burdensome. Oil demand from refiners looks grimmer too, as the margins are yet to pick up, while the recent rally in oil prices and elevated inventories are leaving little room for refiners to ramp up their run rates.”
“The US Supreme Court ordered that construction of the Keystone XL project cannot begin. This pipeline was designed to carry oil from Alberta Canada to the US. There was another order to temporarily shut down the Dakota Access pipeline within 30 days, which will halt transport of 570kb/d of oil. The impact of this will be muted by weaker refinery run rates, but this can potentially worsen the shale producer conditions.”
“The EIA released its monthly report, revising both production and demand higher for this year. Global demand is likely to contract by 8.15mb/d from a previous estimate of 8.34mb/d.”
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