A shocking American Petroleum Institute (API) report eased short term concern supply issues, writes Phil Flynn.
Oil prices may be down on a big build in supply but the overall risk to supply is higher than it has been in years.
A shocking American Petroleum Institute (API) report eased short term concern supply issues as they reported an 8.63-million-barrel crude build, although the build might be overstated due to transportation issues in the Houston Shipping Channel. The API finally reported a gasoline build, reporting an increase of 567,000 barrels. A sizable 2.17 increase in distillate supply also eased supply concerns.
But make no mistake about it, rising tensions with Iran could cause a big oil price spike. Drone attacks on Saudi pipelines and U.S. intelligence reports of potential new targets is keeping risks high. The U.S. State Department has ordered the pullout of employees from both the U.S. Embassy in Iraq and its consulate in Erbil.
Bloomberg News reported that “Global oil demand will grow more slowly than previously thought following an economic lull in Asia, the International Energy Agency said, while warning that supplies stand to tighten due to U.S. sanctions on Iran. Disappointing fuel consumption in China, Japan and Brazil meant 2019 started with a “tough quarter,” the agency said, lowering its global demand estimate for the first time since October. As a result, world oil inventories surprisingly swelled during the first three months of the year. Nonetheless, stockpiles are set to plunge sharply this quarter as demand picks up and as U.S. sanctions squeeze production in Iran, which could fall this month to the lowest level since the country’s war with Iraq in the 1980s, the IEA said.“
