Crude Lower Following Large US Stock Build, Growth Worries Persist

Oil prices fell over a percent on Wednesday following as expected US CPI data and the EIA reporting higher US stocks of crude. The unresolved debt ceiling issue is also weighing on markets. WTI fell 1.25% and reached a low of $71.80/bbl and is now trading around $72.85. Brent is down 1.1% to $76.59 after reaching an intraday low of $75.68. The USD index fell 0.2%.

• WTI touched an intraday high of $73.89 immediately after the US CPI, which came close to resistance at $73.93, the April 28 low. Brent’s high was $77.60 and opened up resistance of $78.49, at the 20-day EMA.
• EIA reported a 2.95mn barrel inventory build after falling 1.28mn the previous week driven by the release of almost 3mn barrels from the SPR. Gasoline stocks fell 3.2mn (implied gasoline demand up 700kbd) and distillate -4.2mn. Refinery rates are due to rise in coming weeks.
• Russia’s energy ministry said that planned output cuts were almost completed in April. Markets have doubted Russia’s desire to cut production as Bloomberg tanker tracker data has shown strong exports.
• Alberta’s wildfires are easing but the weekend is forecast to be warmer and drier. The discount of Heavy Western Canadian to the US benchmark continues to fall and is now the smallest in a year, according to Bloomberg. The fires are said to have had a negligible impact on output but they have opened up pipeline space.