US Sec. of State Blinken Says Sanctions on Iran Oil Are Likely to Remain in Place
June 9, 2021
The API inventory report had crude down 2.1 million barrels and the estimates for today’s DOE inventory report from the Bloomberg survey are calling for a draw of 2.892 million barrels. Cushing, OK crude stocks in the API report were down 420,000 barrels. The API had gasoline stocks up 2.4 million barrels and the estimates for today’s number is a build of 821,000 barrels. Distillates on the API were up 3.8 million barrels with the outlook for today’s numbers to be up 1.451 million barrels.
Energy prices were lower to start out the day yesterday but rallied back after US Secretary of State, Anthony Blinken said, that even in the event of a return to compliance for Iran with the 2015 Iran nuclear deal hundreds of sanctions would remain in place, including sanctions imposed by the Trump Administration. This led the market to assume that it will be longer than expected before there is any significant return of barrels from Iran to the market.
A lot of chatter around the $70 level being big resistance for WTI crude oil. That level got tested several time yesterday and then did manage to settle just over that level, but was it enough to trigger more buying? We will have to see how thing go over the next few days but overall, the trend is still up. Yesterday’s settle over $70 was the first time above that level since October 2018.
According to S&P Global Platts, crude oil production from OPEC and its allies increased by 430,000 bpd in May, led by Saudi Arabia, which accounted for about 84% of the total monthly increase. OPEC’s 13 members produced 25.71 million bpd in May, its highest level since April 2020 when Saudi Arabia launched a brief price war after a breakdown in talks with Russia over how to manage the oil market through the pandemic. Its nine non-OPEC allies, led by Russia, produced 13.21 million bpd, unchanged from the previous month. Despite the production gains, the looser quotas meant OPEC+ compliance stayed mostly steady at 111.45% compared with 111.16% in April.
Rystad Energy reported that OPEC+ is likely to keep increasing its output after July due to the global demand recovery lead by increasing gasoline demand. An analyst said a very strong deficit in global crude and condensate balances is expected in August.
The average estimate for today’s propane inventory update is a build of 1.79 million barrels. Supplies are roughly 19 million behind last year at this time and need to see good builds over the next three and a half months to get to a comfortable level.