Crude: Fundamentals remain oversupplied

March 4, 2015 08:14 AM
Weekly Energy Analysis

Ahead of today’s Energy Information Administration (EIA) inventory snapshot the market is mixed with WTI slightly higher and the rest of the energies complex lower. The American Petroleum Institute (API) reported a smaller than expected draw in crude oil, a surprise build in gasoline and a smaller than expected draw in distillate fuel (see below for more details). If the EIA data is in sync with the API report the recovery rally followers will likely embrace a smaller than expected build in crude oil and could make for an interesting post inventory trading session.

OPEC/Saudi Arabia are maintaining their market share stance. Reuters is reporting comments from the Saudi Arabian oil minister today indicating that Saudi Arabia remains committed to help balance the market. But it is not up to Saudi Arabia to subsidize higher cost producers. He went on to say that he hopes and expects supply and demand to balance and oil prices to stabilize.

The above said Saudi Arabia increased their Official Selling Prices (OSP) for the second month in a row and maybe acting less aggressively then they were a few months ago. Although their words suggest no change their actions may be suggesting that they are easing up slowly on their approach of chasing market share. So is the overall Saudi Arabian orchestrated strategy actually winding down?

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