In the battle for investors’ sentiments, US commercial stockpiles data gave way to American oil export, which rise makes it difficult to clear the surplus on the world market. Brent and WTI fell by more than half a percentage point on Friday, but the weekly dynamics does not look so gloomy. WTI went up by 1.7%, and Brent by 2.2%, closing the second week in positive territory after a sharp decline in early February.
Growth on Thursday gave way to a drop on Friday after the US Department of Energy announced that producers had sold 1.6M barrels from commercial inventories in the week ending Feb. 16. Reserves declined to 420.48M barrels, despite a seasonal decline in demand at the end of the winter season in the northern hemisphere.
And although the drop in demand at this time of year is usually priced in properly by the market, oil imports this week exceeded pessimistic expectations. When analyzing the data, it is also necessary to take into account the interruptions of supplies via the Keystone pipeline from Canada, so some of the decrease can be attributed to the forced one.
As for the dynamics of stocks, the desire of producers to get rid of stocks is dictated by the structure of the futures market. The price per barrel for immediate sale exceeds the price of futures, and in conditions of high uncertainty, producers sell oil so as to unambiguously receive a positive margin. Therefore, in the state of backwardation, spot sales predominate, and in the state of contango, futures are prevailing, which in the latter case contributes to the accumulation of stocks.
Oil exports from the US rose last week to 2M barrels a day, almost reaching the October peak of 2.1M barrels. Net exports (imports – exports) amounted to just below 5M barrels, shifting the balance in the market towards oversaturation, forcing participants to play down. The production practically did not change and amounted to 10.27M barrels, almost on a par with Russia and Saudi Arabia, the largest oil-exporting countries.