Markets Trade Sideways with No Clear Answers
January 28, 2021
The DOE inventory report showed that crude oil stocks were down 9.91 million barrels putting total stocks at 476.65 million. Last year at this time there were 431.654 million barrels. It is true that crude stocks have come down by a large amount over the last six months, roughly 27 million barrels but there are still 44.999 million more barrels than last year and 44.667 million more than the three-year average.
Cushing crude oil stock have been coming down as well and this last week they declined by 2.281 million barrels and sit at 50.129 million barrels compared to last year when they were 35.640 million barrels. Again, still a lot of oil despite the declines but the market continues to look at the rate at which stocks are declining and the positive outlook for more demand and draws the conclusion that at some point supplies will be tight. This outlook continues to support prices along with the overriding thought that the new Biden administration and its policies are likely to create higher prices.
Propane stocks were down 2.208 million barrels putting total stocks at 57.610 million barrels. Last year at this time there were 77.236 million barrels. Midwest stocks were down 1.531 million barrels putting total Midwest stocks at 15.187 million and last year there were 16.941 million barrels. Gulf Coast stocks were down 831,000 barrels putting total stocks at 31.093 million barrel which compare to last when there were 50.972 million barrels. Daily production was up 94,000 barrels per day to a total of 2.389 million bpd.
The stories are still the same with the bulls looking at increased vaccine efforts and with those efforts better demand, better OPEC+ output cut compliance and the US dollar near a 2.5 year low. The bears look at the rising cases of coronavirus and the possible delay to another US coronavirus stimulus package as all putting downward pressure on prices. No clear answer to any of these issues so the market has traded sideways for roughly 11 trading sessions. The market gets news like yesterday’s big draw to crude stocks and it rallies but at the end of the day you look, and the market is still in is same range. Or the market gets bearish news and pullbacks but again at the end of the day, it is still in its trading range. Not sure what will finally break it out in either direction but that is what the market is looking for and trying to figure out.