Crude Continues Rise, China Imports Fall

Oil prices have continued Wednesday’s climb higher following the EIA reporting a US crude stock drawdown. WTI is up 0.6% to $79.43/bbl, off the intraday high of $79.48, and Brent 0.4% higher at $83.93 after $83.98. The two benchmarks faced resistance at $79.50 and $84. The USD index is flat and so not weighing on crude.

• The EIA reported a US crude stock drawdown of 1.36mn, close to expectations. Gasoline inventories rose 915k and distillate 560k. Refinery utilisation rose 1pp to 88.5%.
• China’s April trade data showed a drop in crude imports of 8.8% m/m due to significant seasonal maintenance outages. Demand is being impacted by tight refining margins, increased EV usage and natural gas consumption. Product exports fell 24% as new quotas are yet to be assigned.
• With less focus on geopolitics, attention has returned to supply/demand and OPEC+’s meeting on June 1. It is expected to extend current output curbs into H2 possibly to year end, but quota compliance is being monitored with Russia and Iraq producing above their allowances.
• Goldman Sachs now expects “lower OPEC+ supply for longer”, but sees excess capacity pushing an increase in flows, according to Bloomberg.
• Later the Fed’s Daly appears and US jobless claims are released. The BoE decision is announced and the ECB’s de Guindos, Cipollone and McCaul speak as well as BoC’s Macklem and Rogers.