Oil cheaper after mixed data on American fuel reserves

West Texas Intermediate oil supply for December at the NYMEX fuel exchange in New York City costs US$84.06, below 0.66%.

Brent on ICE in London in deliveries for December is valued at USD 85.96 per barrel, less 0.51%.

On Tuesday, the American Paliw Institute (API) reported in its weekly report that US oil stocks increased by 2.32 million barrels last week.

Gas stores increased by 530,000 barrels in the last week, and the stocks of distilled fuels were higher by 986,000 barrels.

Oil stocks in Cushing, the U.S. oil storage center, fell by 3.73 million barrels. This could be the strongest drop in stocks with this place since January.

As the demand for oil this year strongly reflected, stocks in Cushing have fallen to the lowest level since 2018, and traders are concerned that soon stocks at this site can reach minimum operating levels, which would further support oil price increases on fuel exchanges.

"The oil market remains tense," says Daniel Hynes, Senior Resource Strategy at Australia & New Zealand Banking Group Ltd.

The U.S. refineries record the highest profit margins this year in four years for this time of year.

This signals that demand for oil will remain strong, as refineries continue to process raw material to meet demand for petroleum products, including petrol, which has been heavily expensive.

"It's unbelievable that petrol climbs its long-term peaks during the refinery repair season," says Bob Yavger, director of the Mizuho Securities USA forward contract.

He adds that storage of petrol will probably fall to a long-term minimum, when official data on US oil stocks and its products will be presented by the Department of Energy (DoE) at 16.30 p.m. on Wednesday.

Economists Blackstone Inc, including co-founder of this company – Stephen Schwarzman, estimates that the world can face energy shortages so severe that they will create social unrest.

"We will end up in a real energy shortage," said Schwarzman at a conference in Saudi Arabia. "(...) Energy will probably cost much more," he added.

Larry Fink of Blackrock pointed out that there is a high probability that oil will soon reach USD 100 per barrel, especially since many governments and investors oppose investments in fossil fuels.

Prices of such goods as oil, natural gas and coal have soared this year as the economies revived after the Covid-19 pandemic.

In Europe (ARA) energy coal cost $112 per tonne on Tuesday, and it stood by 2.4 percent compared to the previous day, but has since the beginning of this year increased by 75%.

In China, power coal contracts on the Zhengzhou Commodity Exchange market decreased by 7.6 percent to 1.207 yuan per tonne (189 USD) on Tuesday, the lowest in almost a month.

Analysts Morgan Stanley indicate that coal prices may remain elevated for the rest of this year, with still low stock levels and the approaching peak winter period, before correction in Q1 2022.

Source: PAP