Bearish Sentiment Grows
August 19, 2021
The energy markets continue to sell off as the bearish sentiment grows, mainly due to rising coronavirus cases. With these rising cases is the threat of lower oil demand. Speculators were long in this oil market because there has been optimism that demand would return to normal. The return of energy demand has been impressive, and prices have rallied as a result, but now the questions are starting to seep in that maybe it was too much too fast. Demand for the last couple of weeks has been off, allowing some of these concerns to surface and give the market a dose of reality, leading to profit-taking.
The DOE inventory report had crude oil supplies down 3.3 million barrels. Cushing, OK crude supplies were down 980,000 barrels. Gasoline supplies were up 700,000 barrels, and distillates were down 2.70 million barrels. Crude production was up 100,000 BPD to 11.4 million, which was a bit of a surprise.
Total propane stocks were up 1.432 million barrels putting total stocks at 66.761 million barrels. Midwest stocks were up 834,000 barrels putting total Midwest stocks at 20.747 million barrels. Gulf Coast stocks were up 813,000 barrels putting total Gulf Coast stocks at 33.825 million barrels. The build-to-stock inventory levels are low. Total stocks, Midwest stocks, and Gulf Coast stocks are all near 8-year lows for this time of year. If prices continue to move higher, it will keep some barrels here in the US instead of being exported, which may be one of the main ways the market builds US inventories.