Azeri LT CIF crude oil, exported from Azerbaijan to the world markets, increased by $1.03 (+1.76%), settling at $59.51 per barrel.
This week we hit some milestones in the year-long recovery from the oil demand crash of 2020. West Texas Intermediate (WTI) hit and moved past the $55.00 level, and Brent moved closer to $60. These are some important psychological barriers for the market, and if sustained, as we expect they will be, will push prices higher.
The API announced a significant draw of ~4.3 mm barrels in crude stocks yesterday when a modest build was expected. Moves lower in gasoline and distillate stocks bolstered this price move, as it suggested refineries were cranking out the product to meet present and anticipated demand.
In recent weeks oil prices had been resistant to adverse data (inventory builds of crude and refined products) and had continued to inch higher. At this confirmation of demand, the market's relief pushed prices for WTI through that critical $55.00 threshold.
If the EIA confirms this move today (these reports are sometimes contradictory), we expect another push higher for both crudes, WTI and Brent. Mainly if the confirmation is of significant proportions, like 8-10 mm barrels, continued price advances in crude will soon reverse the sluggishness we have seen in the oil equities market. Oil equities prices are typically off 15-20% from recent highs in an apparent disconnect from the recent strength in oil's underlying data.