WTI Heads To $100 As Pipelines Help Drain Cushing Glut; US Output Hits New 20-Yr High
We take a look at the latest developments in the oil market, including charts of all the major inventory categories....MUCH MORE
The Department of Energy reported this morning that in the week ending Jan. 11, U.S. crude oil inventories decreased by 1 million barrels, gasoline inventories increased by 1.9 million barrels, distillate inventories increased by 1.7 million barrels and total petroleum inventories increased by 3.4 million barrels.
Oil prices were modestly higher after the release of the latest inventory figures. Brent remains firmly within its trading range, but WTI continues to test the waters on the upside. At $94, WTI is near the highest levels since September, and at $16, the WTI-Brent spread is at the lowest levels September.
The Seaway pipeline returned online earlier this week after shutting down on Jan. 2 to complete the final work for the pipeline’s expansion. Capacity on the line is now 400 Kbbl/d, up from 150 Kbbl/d previously.
The EIA said that inventories at Cushing, Okla., jumped 1.8 mmbbl last week. Were the Seaway pipeline running at full capacity, there would likely have been a withdrawal of 1 mmbbl instead.
The Seaway expansion and a host of other pipeline expansions—most notably the Gulf Coast Pipeline project—will help drain the glut of crude oil from Cushing and the broader Midwest region. That may help the spread between WTI and Brent narrow further in the coming months.
Meanwhile, U.S. oil production hit a fresh 20-year high last week at 7.041 mmbbl/d. Some analysts are making the bold call for U.S. output to reach 8 mmbbl/d by the end of the year.
On the technical front, Brent is still considered range-bound between $107 and $117. WTI, on the other hand, is in an uptrend. A break of the $95 level would expose a path to the psychologically significant $100 mark.
BRENT
